Scottish Government high level action plan in response to the Committee on Economic, Social and Cultural Rights

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Thematic Tags

Business and human rights; Tax; Due Diligence

Concluding Observation 21a

The Committee recommends that the State Party, along with the devolved governments […] Strengthen efforts to combat illicit financial flows, tax evasion and fraud, particularly by wealthy individuals and businesses, by establishing public registries of companies and trusts with mandatory due diligence.

Context

The establishment of registers of companies and trusts is reserved to the UK Government. Where we have the power to do so, we take the toughest possible approach to tackling tax avoidance. The responsibility for income tax is split between us and the UK Government, and it is collected and managed by His Majesty’s Revenue and Customs (HMRC). The Scotland Act 2012 gave the Scottish Parliament the power to set a different rate of income tax in Scotland, known as the Scottish Rate of Income Tax, and took effect in 2016. The Scotland Act 2016 extended these powers, enabling the Scottish Parliament to set income tax band thresholds (excluding the personal allowance) as well as rates.

The Revenue Scotland Tax Powers Act 2014 establishes the Scottish general anti-avoidance rule. This rule allows Revenue Scotland to take counteraction against tax avoidance arrangements in relation to devolved taxes which it considers to be artificial, even if the arrangements otherwise operate within the letter of the law. We introduced the Non-Domestic Rates (Miscellaneous Anti-Avoidance Measures) (Scotland) Regulations 2023 which enable local authorities to tackle anti-avoidance practice for non-domestic rates. With effect from 1 April 2025, local authorities can retain 50% of the additional non-domestic rates income raised from the use of these powers.

We published an updated Tax Strategy in December 2024, outlining our commitment to establishing a fair, efficient, and effective tax system, which involves collaboration with revenue authorities to enhance compliance with devolved taxes and to develop an efficient system that minimises compliance costs for taxpayers.

Key Actions

We will enhance data sharing with local authorities and HMRC to better identify individuals who can pay non-domestic rates but do not. A pilot study by Audit Scotland in 2020 found that data sharing increased collected liabilities to about £1.9 million annually.

We are working to strengthen our approach to Scottish tax compliance as laid out in our June 2025 Medium-Term

Financial Strategy and accompanying Fiscal Sustainability Delivery Plan. This includes working in partnership with HMRC through the joint compliance working group, a sub group of the Scottish Income Tax Board, and collaborating with Revenue Scotland to deliver Scottish Aggregates Tax and Scottish Building Safety Levy through the use of data and operational insights.