by a Newsnet reporter

SNP MSP John Finnie is calling on the UK Government for the new Police Service of Scotland to be given parity with its Northern Irish counterpart in not paying VAT.

The potential VAT liability of the new single Scottish police force and single fire and rescue organisation is estimated to be £22m annually for the police and £4m for fire and rescue services.

At present, police forces and fire services are able, under section 33 of the Value Added Tax Act 1994, to recover any VAT costs incurred. A move to single Police and Fire services in Scotland may result in the new bodies losing their section 33 exemptions status.  However the single Police Service of Northern Ireland enjoys full VAT exemption.

Mr Finnie says it would be a “naked cash grab” from Westminster and “utter hypocrisy” for the Police Service of Northern Ireland to be exempt while Scotland is lumped with a huge bill.

The SNP MSP for Highlands and Islands and a former police officer himself, has written to Justice Secretary Kenny MacAskill urging him to make representations to have Scotland needs to be treated equally with Northern Ireland.

He said:

“It is utterly hypocritical of the UK Government to demand the new Police Service of Scotland pay VAT while the PSNI does not.

“This would just be a naked cash grab from Westminster. The case for parity between the two forces is unanswerable.

“Only this week figures have shown Scottish police forces are estimated to have paid well over £1.2million in VAT on fuel costs to the Treasury in 2011.

“This is a significant amount of money – especially at a time when record fuel prices are damaging our emergency services.

“These same figures showed the amount of duty paid on fuel by police forces and fire brigades in Scotland has been hiked by 53 per cent and 69 per cent respectively between 2003 and 2009.

“While emergency services budgets are under pressure, we must do everything in our power to help support them, which is why I’m calling on Westminster to treat Scotland in the same way as Northern Ireland.

“I have written to the Justice Secretary urging him to make representations to the UK Government on this matter.

“For the new PSS, paying VAT would result in the loss of considerable sums that should instead be invested in making the new service the best it can be.”



2012-02-26 01:34

Yet another blatant “plus” for retaining the union?

I don’t think so.

Our Emergency services need every bit of help they can get, particularly in these difficult financial times.

If the PSNI, apparently, do not pay VAT then why should our Emergency services, either currently or after they become a single service have to pay VAT?
2012-02-26 02:40

ot But SATURDAY OCTOBER 18th named as day of the Referendum in new Sun on Sunday. VOTE YES

2012-02-26 01:39

I’m with you on this Arby.

The only thing that puzzles me is why it has taken so long for this point to be raised.
2012-02-26 01:43

I’m not totally clued up on this, or anything else for that matter:D, but I believe some time ago I may have read that the Scottish government had been having talks with Ozzy Osbourne with a view to getting him to revise his idea of not allowing the Scottish Emergency services to reclaim the VAT that they pay.

2012-02-26 01:40

It seems to me that Westminister favours NI far more than Scotand, lowering corporation tax, air passenger duty and now vat exemptions.

Union dividend right enough.

Disappointing and shows that independence is needed to ensure that we are not discriminated against anymore.
2012-02-26 02:02

@C2DEalba the only reason that Northern Ireland gets preferential treatment is because they can blackmail Westminster that they will join the Republic, such an outcome would be a massive loss of face to Westminster who has invested considerable sums of money in keeping Norther Ireland “British” and would also lead to questions being asked in Scotland and Wales.
2012-02-26 02:09

I didn’t consider that aspect however, would it not be case that it could easily make it more obvious to the people of Scotland that the Union does not work and thus increase the drive for independence.

NI should join the Eire.

2012-02-26 02:14

Has the UK government actually stated that it intends to charge the new bodies VAT or is this just scaremongering?
2012-02-26 09:12

Quoting Jiggsbro:

Has the UK government actually stated that it intends to charge the new bodies VAT or is this just scaremongering?

The issue has been highlighted by all of those involved in the reform project. Currently VAT comes under local govt arrangements, but new force will be a Scot Govt body. The Scottish Police Services Agency are still fighting with HMRC over this. The topic was raised during evidence sessions in Parliament this week. The comparision with NI is that neither police nor fire service there are local govt, but both have VAT status as if they were.
This has been known about since the start of the project but HMRC wont reply to SG on the matter.


2012-02-26 02:25

NI could / would join Eire, their neighbour next door, so they have some leverage. Cash will flow.

We want independence from the south Scots from below the border and no link-ups so we get a promise for a bag a’ smarties.
2012-02-26 09:17

Its been some time since the UK deliberated on whether or not to grant NI the ability to alter the rate of CT. Most of the deliberations were concluded last year and I expected an announcement way back in the Autumn statement.
So far NI has had devolution of APD which Scotland could dearly use.
CT I fully expect in the Budget with Scotland as with VAT here, losing out again.
With no Treasury here in Scotland we can’t simply gather taxes and then submit to London, if we so wished.
Time for out parliament to start acting like one and not a branch office of Westminster.
2012-02-26 10:31

One feasible solution would be to rationalise down to 2 police forces rather than just one. One force serving urban areas throughout the country, and another serving rural areas.
This has several benefits.
1. This mitigates the concerns that the plan to amalgamate into just one police-force focuses too much power in one hand.
2. Keeps the multi-police force as a status-quo, so VAT should still be reclaimable as at present
3. The process of re-organisation still provides the opportunity to proceed with rationalisation of back-office systems and manpower provision, ensuring the expected gains from economies from scale are still possible.

Time to think out of the box !

Alba Gu Brath
Triangular Ears
2012-02-26 15:31

Surely the obvious solution is to extend Lothian and Borders police force to cover the whole of Scotland, maintain its local funding, but adjust it upwards accordingly, then rename the force accordingly.

After all, London loves its little legal fictions, so they should have no problems with this.

edinburgh quine
2012-02-26 11:04

Has Ozzy (like that by-the-way, Arbroath 1320) actually said we’d have to pay the VAT? Or has John Finnie made an assumption? Before we get all hot under the collar, it might be nice to be sure of that
Ard Righ
2012-02-26 11:39

Anything that prevents filling the coffers of Waste monster is good.

While we’re about it can we do away with the inefficient centralised operations via Inverness, it is ludicrous for an emergency services call to be routed via Inverness for the Orkney Isles and Shetland, is significantly slows response time.
2012-02-26 11:58

Centralised operations create efficiencies in overheads without significantly slowing response times. I’m not sure it takes significantly longer for a telephone call to connect from Stromness to Inverness than Stromness to Kirkwall. Technology is pretty speedy these days.

2012-02-26 16:45

It is pretty poor policy making that this issue has not been sorted out before now.

Surely this was part of the cost/benefit analysis that the SNP undertook?
2012-02-26 18:36

Quoting gfaetheblock:

It is pretty poor policy making that this issue has not been sorted out before now.

Surely this was part of the cost/benefit analysis that the SNP undertook?

It has been considered and even with the VAT issue there is still a strong case to make the change. If for no other reason than local control will put pressure on the smaller forces first. The priority is to protect the frontline capabilities.

To answer an earlier point – it is not the restructure that changes ther VAT status but the change from Local Authority to Government.

The problem is Westminster – so the best way to protect this finance from going south is a YES vote.

I’ll be voting YES to make our communities safer!


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