ICAS responds to Scottish Government Consultation on land reform
By Justine Riccomini, Head of Tax (Employment and Devolved taxes)
13 October 2022
Justine Riccomini explains the ICAS response to the Scottish Government’s call for evidence on land reform
ICAS submitted a response to the Scottish Government’s call for evidence on ‘Land Reform in a Net Zero Nation’ by the deadline of 19 September 2022.
The vast majority of questions in the consultation related to areas outside of ICAS. However, two questions came under the tax department’s area of knowledge, so a submission was made in response to those two questions alone.
The questions and ICAS’s responses are summarised below:
Part 11: Transparency: Who owns, controls and benefits from Scotland’s Land
Q41. Do you agree or disagree with our proposal to explore:
- Who should be able to acquire large-scale landholdings in Scotland
- The possibility of introducing a requirement that those seeking to acquire large-scale landholdings in Scotland need to be registered in an EU member state or in the UK for tax purposes
ICAS consider that there is nothing wrong with investigating land ownership in Scotland and who is able to acquire land, as well as whether a tax registration requirement should be introduced.
However, three existing registration measures already exist which appear to cater sufficiently well and additional legislative provisions should only be introduced where there is a clear gap between the three measures which is driving undesirable behaviours, preventing inward investment or resulting in the prevention of a clear and transparent ownership mapping process.
The three existing measures are:
- Trust Registration Service (TRS)
- Register of Overseas Entities (ROE)
- Register of Controlled Interests in Land (RCIL)
Part 12: Other land related reforms
Q42. Do you have any views on what the future role of taxation could be to support land reform?
ICAS commented that they do not consider any measures over and above CGT or IHT to be necessary. Other than the possible formulation of a non-UK resident surcharge mechanism within Land andBuildings Transaction Tax (which seems unlikely to have any major influence over land ownership patterns and trends), taxation is unlikely to be the silver bullet which resolves the question of land ownership in Scotland.
ICAS consider that it is nevertheless necessary to consider what the purpose of any taxation measures might achieve – and whether these measures would result in encouraging or deterring investment. Care needs to be taken in respect of large-scale farmland holdings which might suffer a detriment if legislative changes are brought in which might disproportionately affect the farming industry.
The consultation paper appears not to have considered both sides of this issue in sufficient detail. In addition, there is the uncertainty of behavioural outcomes, which need to be considered in more detail when developing policy on land reform.
In conclusion, ICAS consider that better tax policymaking would be best supported by gathering full information on land use and ownership, as recommended in the January 2022 paper. This would enable policymakers to be well informed and thus better equipped to forecast any tax policy outcomes.
If you wish to contribute to the debate…why not join an ICAS tax committee and bring your expertise straight to the Tax team?