SCOTLAND'S new property tax could be thrown into chaos when it comes into force next April, watchdogs have warned, as the government body set up to collect has been hit by delays.

 

Public spending watchdog Audit Scotland said staff were not put in place early enough to manage the new Land and Buildings Transaction Tax (LBTT) and warned a complex computer system designed to administer the levy may not be fully operational in time.

In a report out today (Thurs), auditors warn hundreds of tax payments per day could take longer to process, pushing up the overall costs of collection.

Two newly devolved taxes, LBTT and the Scottish Landfill Tax, are due to be collected by Revenue Scotland, the Scottish Government's equivalent of HMRC, from April 1.

Between them they are expected to raise £558million, or 1.5 per cent of the Scottish Government's budget.

News that Revenue Scotland is struggling to meet the deadline comes as a major embarrassment to Deputy First Minister and Finance Secretary John Swinney, who during the referendum campaign claimed an independent Scotland would collect taxes more efficiently than the UK.

Last night he claimed the report showed Revenue Scotland was "on track" to collect the taxes.

Opponents described the situation as as "shambles" and urged the Finance Secretary to step in to ensure taxes are collected as planned.

The Audit Scotland report identified a series of problems at Revenue Scotland, the new tax agency set up within the Scottish Government in 2012.

It says 40 operational staff, due in place by the end of October, are now set to be hired in two waves at the end of January and the end of February.

There is a risk the jobs will not be filled in time, the report warns.

It also reveals delays in procuring an IT system to collect and administer the taxes.

Revenue Scotland is developing contingency plans in case the system is not fully up and running.

It will decide this month whether to implement the fall-back plan, which would be slower, increase the cost of processing payments and "may bring reputational risks," according to the auditors' report.

The report says set-up costs have already soared by £1.1million to £4.3million.

The total cost of preparing for the new taxes and collecting them over the first five years has risen by £1.7million to £21.9million.

Delays would have a bigger impact on LBTT than the Landfill Tax, the report says.

The Stamp Duty replacement - expected to raise £441million - will require between 450 and 600 property sales per day to be taxed.

Audit Scotland also sound an alarm bell over the partial devolution of income tax.

A Scottish Rate of Income Tax, due to raise about half the total income tax levied in Scotland, will be set from April 2016.

The watchdog says Revenue Scotland must have staff in place in time to ensure it can monitor the work of HMRC, the UK taxman which will continue to collect income tax.

At present, it says the Scottish Government is "dependent on a single member of staff" to fulfil its role.

The additional cost of collecting a Scottish as well as UK incomer tax has been cut by HMRC to between £35millio and £40million, £5million lower than previous estimates.

The report comes weeks after as cross-party deal to hand Holyrood control over 60 per cent of its spending in future.

Scottish Labour's finance spokesman, Iain Gray, said: "John Swinney must take responsibility for the catalogue of failings highlighted by Audit Scotland.

"The SNP has spent the last three years calling for more tax raising powers.

"This is laughable given their inept stewardship of the ones they already have."

Scottish Conservative finance spokesman Gavin Brown MSP said: "The cabinet secretary must make a statement to the Scottish Parliament on this, because the findings in this report are alarming."

Mr Swinney said the recruitment of staff and development of IT systems were "on track".

He added: "I am confident we have robust plans in place to ensure smooth delivery of the service and it is heartening to see this thorough planning acknowledged by Audit Scotland."