The Scotland Bill

Written evidence submitted by The Law Society of Scotland

INTRODUCTION

The Law Society of Scotland welcomes the opportunity to submit evidence to the Scottish Affairs Committee in respect of the Scotland Bill introduced into the House of Commons on 30 November 2010.

The Society contributed substantially to the consultative and parliamentary process which resulted in the Scotland Act 1998. The Society took the view then and takes the view now that the Scotland Act ("the Scotland Act") is one of the most important pieces of legislation to have affected the Scottish Legal System since the European Communities Act of 1972. It was central to the programme of constitutional change which began in 1997. In tandem with the Human Rights Act 1998, the Act provides much of the framework of what approaches a form of written constitution – as it underpins both logically and legally the exercise of power by the Parliament.

Competence and Vires

Together with the Human Rights Act 1998, the Scotland Act requires the courts to perform constitutional functions in a way in which prior to these Acts they only had experience of in European Union matters. The Scotland Act 1998 introduced a new way of thinking for Scottish lawyers. Prior to then, their experience of primary legislation was limited to Acts of the UK Parliament which were (subject to the European Communities Act 1972) the Acts of a sovereign legislature and were undoubted in terms of their constitutional propriety provided they had received the Royal Assent.

However, the provisions in respect of the competence of the Scottish Parliament contained in Sections 28, 29 and 30 of the Scotland Act ensure that Scottish lawyers had to consider the legislation of the Scottish Parliament in a different light. The first question which Scottish lawyers must ask themselves first and foremost is "Is an Act of the Scottish Parliament within the competence of the Scottish Parliament to enact?" The limits on the legislative competence of the Scottish Parliament are set out specifically in Section 29 of the Scotland Act which states in subsection 1 that "an Act of the Scottish Parliament is not law so far as any provision of that Act is outside the legislative competence of the Scottish Parliament." Section 29(2) provides the framework of determining criteria to guide advisers and the courts as to what is "outside that competence". Those criteria are that a provision:-

a) Would form part of the law of a country or territory other than Scotland or confer or remove functions exercisable otherwise than in or regards Scotland;

b) Relates to reserved matters;

c) Breaches the provisions of the restrictions in Schedule 4;

d) Is incompatible with any of the Convention rights or with Community law; or

e) Would remove the Lord Advocate from her position as Head of the Systems of Criminal Prosecution and Investigation of Deaths in Scotland.

Accordingly, if the Scottish Parliament legislates in a way which breaches any of these restrictions that legislation "is not law".

That new way of thinking about legislation (and about the devolved powers of Ministers under Section 54) has been adopted by Scottish lawyers on behalf of their clients in many cases.

Law Reform

One other major change which occurred with the Scotland Act coming into effect was the approach to Law Reform. Prior to the Scotland Act, many Scots lawyers complained that the process of law reform was haphazard and patchy. It was difficult for the UK Parliament to assign adequate legislative time to more than one Scotland specific Bill per session – although, of course, there were of course occasions when more than one bill was possible but that was a matter of the coincidence of parliamentary time and political will.

Furthermore, the more deep-seated complaint was that legislation was often enacted by Westminster with a UK application in mind which did not give adequate consideration to how the legislation affected the law of Scotland.

The law of Scotland may have been subject to only relatively narrow self-contained amendments during the nearly 300 years of the absence of the Scottish Parliament, but since 1999 the Parliament has certainly developed the law in many areas where it was felt that reform was needed.

The Parliament has also embarked upon many useful inquiries through the agency of its committees. Some of the most significant being from the perspective of the Society:-

· The inquiry into the regulation of the legal profession;

· The inquiry into Legal Aid

· The inquiry into the police; and

· The inquiry into the transposition of EU Directives

Subject to the limits set out in Section 29 of the Scotland Act, the Scottish Parliament has a very wide jurisdiction for legislation. It includes agriculture, forestry and fishing, education, environment, health, housing, law and home affairs, local government, natural and built heritage and planning law, police and fire services, social work, sport and the arts, statistics and public records, tourism and economic development and transport. Since 1999 the Parliament has enacted 166 Acts of the Scottish Parliament and the broad range of legislation covers issues of such importance as reform of the criminal law, reform of the system of land tenure and agricultural holdings, legislation regarding adults with incapacity, planning law and licensing law and many other areas besides.

The interface between the UK and Scottish Parliaments

The broad range of reservations in Schedule 5 to the Scotland Act ensures that the UK Parliament (and Whitehall Ministries) have a very substantial role in making law for Scotland. The Society has tried to ensure since 1998 that it comments constructively on consultations and bills which emanate from the UK Ministries and Parliament.

The importance of the UK Parliament’s legislative role for Scots law must not be underestimated or under represented. Over the lifetime of a Parliament, around 50 Acts are passed; many of these have important provisions affecting Scotland. There should be a better understanding of the range and depth of Westminster legislation, however less publicity, lack of proximity and perceived remoteness ensure that the UK Parliament’s role receives significantly less prominence than that of Holyrood.

One important function which closes the gap between the parliaments is the operation of the Sewel Convention and the need for legislative consent motions but more regular contact and exchange would be for benefit of both Parliaments, both electorates and the law of Scotland.

Inter-ministerial meetings should take place on a regular and transparent basis. The fact that joint ministerial committees are meeting more often is a great improvement on past practice.

Inter-parliamentary contact is also important and members of both parliaments should be encouraged to meet and exchange views on topics of mutual interest.

SPECIFIC COMMENTS

Part 1 – The Parliament and its powers

Clause 1 - Administration of elections

The Society has no comment to make.

Clause 2 - Combination of polls at Scottish Parliamentary and other reserved elections

The Society has no comments to make.

Clause 3 – Supplementary and transitional provision about elections

The Society has no comment to make.

Clause 4 – Presiding Officer and Deputies

The Society agrees with the proposal in Clause 4(3) and (4) that the Parliament may elect one or more additional deputies to the Presiding Officer. This is a sensible provision which the Society endorses.

Clause 5 – Scottish Parliamentary Corporate Body

The Society agrees with the proposal to amend Section 21 of the Scotland Act to provide that the members of the corporation shall be the Presiding Officer and at least four members of the Parliament. This will help to take account of minority political interests.

Clause 6 – Bills: statements as to legislative competence

The Society gave evidence, in writing and in oral evidence, to the Calman Commission on the role of statements by Ministers and the Presiding Officer as to their views on the legislative competence of a Bill introduced in the Scottish Parliament. In summary, the Society was of the view that the requirement for such a statement of legislative competence is an important part of the legislative process and that such statements can play an important role in informing parliamentarians and the public about the reasons why it is thought that a Bill is within (or indeed outside) legislative competence. The Society argued for greater transparency and detail in the giving of reasons – especially by the Presiding Officer – for making a statement that a Bill is within legislative competence. Fuller reasons have the potential to inform public debate about the powers of the Scottish Parliament and the appropriateness of proposed legislation.

The Society agrees with the proposal to amend Section 31(1) to ensure that any person who introduces a Bill, whether he or she is a Minister, a Back Bench MSP, a Committee Convener introducing a Committee Bill or a private individual or organisation introducing a private bill, should certify the legislative competence of the measure.

The Society is also of the view that the explanatory notes published with the Bill should give a general account of the main considerations that informed the statement on legislative competence under Section 31(1).

We remain of the view that there is a clear public interest in transparency of legislative competence reasons.

The Society also remains of the view that the Presiding Officer should be required to give reasons for a positive statement of legislative competence as well as for a "negative one

The fact that disclosure may provide those who wish to challenge legislation with information is not a sufficient reason for non disclosure.

The Society is also concerned that amendments to a Bill are not subject to a legislative competence statement and that a Bill can be amended quite considerably at either stage 2 or stage 3 and the only check on competence then resides with the law officers.

In the Society’s view, such amendments ought to be subject to a statement of legislative competence.

Clause 7 – Partial suspension of Acts subject to scrutiny by Supreme Court

This clause provides for a new procedure under which a part or parts (rather than the entirety) of a Bill may be subject to a reference to the Supreme Court under Section 33 of the Scotland Act 1998. Such a reference may be made by one of the Law Officers. Currently, a reference of a whole Bill may be made to the Supreme Court, one consequence of which is that the Bill cannot be submitted for Royal Assent. The new procedure would allow the Bill to receive Royal Assent but would prevent specific provisions being brought into force until their competence had been ruled upon by the Supreme Court.

The Society has the following comments to make on Clause 7.

We understand that one reason for proposing this amendment is a concern that the existing s33 reference power has not been used because the effect of a reference would be to ‘freeze’ the whole of a Bill even where only one or a limited number of provisions may be thought to give rise to a question about competence. In those circumstances a Law Officer would have to balance the desire for clarity about the competence of limited provisions against the public interest in allowing an otherwise competent Bill to proceed for Assent.

The Society regards the power of the Law Officers to refer a Bill to the Supreme Court for a ruling on competence pre-Assent as potentially valuable, allowing questions about the constitutionality of the legislation to be considered in advance of that legislation being relied upon by the public. A reference offers an opportunity for the UK and Scottish Governments to obtain a judicial determination from the UK Supreme Court on any difference of opinion as to the competence of the legislation. Such a determination would be available to the public in general and to legal advisers.

If concerns about the impact of a reference have, in the past, caused Law Officers to decide not to make a reference – despite having real concerns about the competence of one or more provisions of an Act of the Scottish Parliament – that suggests the reference power may need to be reformed.

In principle, the concept of a ‘limited reference’ is attractive, addressing the concern discussed above. The Society would note, however, that there is no detail contained in the Bill or in supporting materials explaining how in practice the limited reference power would be used. In particular, it may prove to be difficult in practice to separate parts of a Bill – leaving some to come into force and others to await a ruling from the Supreme Court. Further detail about how such references might operate would be welcome.

Clause 8 – Members’ interests

The Society has no comment to make.

Clause 9 – Constituencies, regions and regional members

The Society has no comment to make.

Clause 10 – Continued effect of provisions where legislative competence conferred for limited period.

Clause 10 amends Section 30 of the Scotland Act which gives Her Majesty the power by Order in Council to make any modifications of Schedules 4 or 5 which she considers necessary or appropriate. It would be possible for such an Order in Council to specify that the modification ceases to have effect at some point in the future, accordingly giving the Scottish Parliament legislative competence in relation to one or more matters for a limited period of time (a sunset provision). Clause 10 inserts new subsections 5 and 6 into Section 30 so that, where an Order in Council contains such a sunset provision, that Order in Council may also provide that any Act of the Scottish Parliament, made in reliance on the competence conferred by the Order and which is made prior to the sunset, should continue to have effect after the sunset provision takes effect. The Society does not see the necessity for this clause and would welcome further explanation of the need for it.

Clause 11 – Air weapons

Clause 11 of the Bill brings the regulation of air weapons within the legislative competence of the Scottish Parliament. This is without prejudice to the Secretary of State retaining the power to make rules under Section 53 of the Firearms Act 1968 to make rules and orders relating to specially dangerous weapons, or to prohibit specially dangerous weapons in terms of Section 1(4) of the Firearms (Amendment) Act 1988.

The Calman Commission Report agreed (rec 5.13) that the regulation of air guns should be devolved to the Scottish Parliament. The Commission had taken into account the fact that having different regimes within the separate jurisdictions of the United Kingdom could introduce an additional layer of complexity and greater bureaucracy but that a system of mutual recognition which would allow firearm certificates issued in one jurisdiction to be accepted in another (provided safeguards were felt to be adequate) could be created (paragraph 5.154).

The Society does not envisage any practical cross border difficulties which could not be accommodated in subsequent legislation, which would clearly require to provide for reciprocity with regard to licensing regimes should the Scottish Parliament, in terms of Clause 11 of the Bill, decide to regulate air weapons.

Clause 12 – Insolvency

The Society agrees with this clause.

1.  The Insolvency (Scotland) Rules 1986 regulate the procedure in Company Voluntary Arrangements (‘CVAs’) (Part 1), Administration (Part 2), Receivers (Part 3) and Winding up (Parts 4 – 6). Part 7 (Meetings etc) are applied variously to the procedures in Parts 1 – 6.  There are also cross-applications among Parts 1 -  4, particularly in applying certain provisions in Part 4 to the other procedures.

2.  The 1986 Rules were made by the relevant UK Department prior to Devolution.  By the Scotland Act 1998 CVAs and Administration were reserved to Westminster (along with the regulation of Insolvency Practitioners) and Receivership and Winding Up (and Bankruptcy) were devolved to Holyrood.  This had the effect that the procedures relating to insolvent companies (and LLPs) under Scots Law were governed by Rules which were partly the responsibility of the UK Parliament and partly of the Scottish Parliament. Moreover, as a result of the cross-references mentioned above the same Rule might be subject to review and amendment by both legislatives.  Obviously, this was a situation in which confusion and error was a significant risk, and to that extent unsatisfactory in principle.

3.  This was amply demonstrated when Parts 1 and 2 of the Scottish Rules (CVAs and Administration) were amended by the Insolvency (Scotland) Amendment Rules 2009 (SI 2009/662).   These amendments facilitate the use of electronic communication and remote attendance at meetings but only in CVAs and Administration.  They cannot be used in winding up procedure, notwithstanding the fact that many administrations ‘evolve’ into winding up to enable residual funds to be distributed.  Moreover, an error in the 2009 SI has resulted in the existence of two sets of rules for the submission of claims in an administration, i.e. the adapted rules for winding up prescribed in the original 1986 Rules and a different procedure under the 2009 amendments.

4.  The Professional Bodies whose members are closely involved in insolvency matters (ICAS, the Law Society of Scotland and R3) have criticised the Scottish Rules in numerous respects and have sought improvements for the benefit (particularly) of business and trade in Scotland; the present situation generates unnecessary expense which has to be borne by the creditors of insolvent companies. The overlap of responsibility for the Rules referred to above) prompted the R3 evidence to the Calman Commission that responsibility for the Insolvency Rules applicable in Scotland should be re-reserved to Westminster. Re-reservation may therefore result in a coherent and practical set of insolvency rules for Scotland consistent with those applying in the rest of the UK.  

5.  The Scotland Bill proposes that the Rules on Receivers (Part 3) should remain devolved since floating charges and receivers are devolved areas (and on a strict analysis relate to the law of debt and securities therefore, not insolvency).  Since Part 3 is connected in its terms to the other Parts (particularly Parts 4 and 7) this would require a complete rewrite of that Part to eliminate the cross-references and to make further improvements (such as those relating to electronic communication mentioned above). 

Clause 13 – Regulation of the health professions

The effect of Clause 13 is that the regulation of any health professions which are not regulated by the enactments listed in Section G2 is within the legislative competence of the Scottish Parliament. Sub-section 2 of Clause 13 amends the definition of the health professions in Section G2 to add to the reservation the regulation of any other profession concerned wholly or partly with the physical or mental health of individuals except any profession regulated by the Regulation of Care (Scotland) Act 2001 (Social Workers). This provision re-reserves to the UK Parliament the regulation of those health professions that are currently within the legislative competence of the Scottish Parliament. Sub-Sections 3 to 6 of the Clause make consequential amendments to the Health Professions Council professions, the General Dental Council and the General Pharmaceutical Council.

The Society has no comment to make on this clause.

Clause 14 – Antarctica

Clause 14 re-reserves the regulation of activities in Antarctica which is governed by the Antarctic Act of 1994.

The Society has some concern about the rationale for this clause as set out in the explanatory notes to the Bill. Those notes suggest that one reason for re-reserving Antarctica is that the Scottish Parliament has never exercised its competence in this area. The Society does not consider that the failure to utilise an area of legislative competence is of itself a good reason for removing that area from the scope of the Parliament’s (or Scottish Government’s) powers.

The Society would welcome more detailed explanation for this proposed re-reservation.

Clause 15 – The Scottish Government

The Society has no comment to make.

Clause 16 – Time limit for human rights actions against Scottish Ministers, etc.

The Society agreed in its evidence to the Calman Commission that (so far as time limits for raising proceedings were concerned) the position of Scottish Ministers under the Scotland Act was anomalous in comparison with the position of other public authorities in Scotland and the UK Government in respect of devolution issues arising out of actions by Ministers allegedly incompatible with the European Convention on Human Rights.

The Cabinet Secretary for Justice, Kenny MacAskill MSP, in his announcement in the Parliament on 11 March 2009 informed the Parliament of progress since the case of Somerville v Scottish Ministers [2007] UK HL44. That case concluded that in the absence of an explicit statutory time bar in the Scotland Act 1998, claims could be made under that Act against Scottish Ministers which would not be permissible under the Human Rights Act 1998 because that Act contains an explicit time bar.

The introduction of a one year time bar enable d the Scottish Ministers to draw a line under their liability in relation to claims of the kind being made in respect of the Somerville judgement.

There was no wide consultation on this issue . The Society appreciates the Scottish Government’s desire to legislate but the lack of consultation on the Convention Rights Proceedings (Amendment)(Scotland) Act 2009 and the employment of the Scottish Parliament’s emergency procedure limit ed the opportunity to consider the total impact of the Bill. Th e provisions in that Act as repealed and re-enacted by this Bill are important and will have the effect of limiting the capacity of many people, who may have had their human rights infringed by Scottish Ministers , from taking appropriate action to vindicate their human rights.

Nevertheless, the Society agrees with the general proposition that there should be consistency between the time bar period for devolution issues under the Scotland Act and other devolution legislation and the time bar period under the Human Rights Act 1998.

It is questionable whether one year is the correct period for the time bar. It is also appropriate that an extension of the period of one year is permitted under new Section 100 (3B)(b) for such "longer period as the court or tribunal considers equitable having regard to all the circumstances". That provision should ensure that the strict one year period is mitigated in appropriate circumstances.

Another issue which relates to the time bar period is the point at which the year begins to run. The Bill provides in new Section 100 (3B)(a) that the period of one year begins "with the date on which the act complained against took place".

This may conform with the Human Rights Act 1998, Section 7 but is at odds with other limitation periods in Scots Law such as the three-year period under Section 22B of the Prescription and Limitation ( Scotland ) Act 1973. That period runs from the earliest date on which the person seeking to bring the action was aware of the basis of the action. The Society is of the view that this start point of awareness is fairer than the objective basis in the Bill.

Clause 17 – BBC trust member for Scotland

The Society has no comments to make.

Clause 18 – Scottish Crown Estate Commissioner

The Society agrees with the creation of the Scottish Crown Estate Commissioner.

The qualifications for this office are imprecise and it would be appropriate for this Clause to provide some further detail as to the qualifications of the Scottish Crown Estate Commissioner.

Clause 19 – Misuse of drugs

Clause 19 amends the Misuse of Drugs Act 1971 by allowing Scottish Ministers the power to issue l icences which allow some controlled drugs to be legally prescribed by doctors (and therefore held and used legally) for the purposes of treating addictions.

The Calman Commission took the view that this power relates to issues of health rather than the criminal justice system, and accordingly would be more appropriately exercised in Scotland by Scottish Ministers, on the basis that devolving the responsibility for the licensing regime under which doctors operate and report on their prescribing of controlled drugs (such as heroin) would be commensurate with the responsibilities Scottish Ministers already have for public health and drug rehabilitation.

The Society agrees with this proposal.

Clause 20 – Power to prescribe drink driving limits

The Calman Commission, in recommending that regulation making powers relating to drink driving limits should be transferred to Scottish Ministers, considered whether having different rules applying to different parts of a shared road network with respect to the drink driving limit might create confusion among motorists, but took the view that changes would simply require re-education. The Commission cited the smoking ban being introduced in Scotland earlier than in England and Wales as an example of different rules applying in a wide variety of areas. However the Society is of the view that the residual effect of drinking and driving has not been taken into account.

The provision of different blood alcohol limits could have the effect that where a driver was breathalysed in Carlisle on a journey north and was under the limit there , he or she might subsequently be tested positive in relation to a lower drink driving limit applying in Scotland . There is an issue about whether such an outcome is desirable. Scottish Ministers, in terms of Clause 20(9) of the Bill will be required to consult with such representative organisations as they think fit before making any regulations.

Clause 21 – Speed limits

This provision would allow Scottish Ministers the power to set speed limits on all Scottish roads without the need to consult with the Secretary of State.

Clause 21 (6) of the Bill inserts a new Section 64(2A) to enable Scottish Ministers to specify signs for a Scottish national speed limit which is defined under the new Section 64(2C) of the 1998 Act.

It should be noted that Scottish Ministers already have at present the power to make regulations with regard to speed limits in terms of the Road Traffic Regulation Act 1984, Sections 17(2) and (5), but only with respect to particular special roads, which are defined in terms of the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers Etc) Order 1999 (SI199/1750)).

The Society agrees with this clause.

Clause 22 – Speed limits: supplementary

The Society agrees with this clause.

Clause 23 – Implementation of international obligations

Clause 23 provides that a regulation made by UK Ministers, implementing an international obligation can have effect throughout the UK, irrespective of whether or not it deals with matters which are within devolved competence.

The Society agrees with this clause.

Clause 24 – Taxation: introductory

Ministers should be obliged to consult relevant interests on the implementation of these provisions.

Clause 25 – Amendments relating to the Commissioner for Revenue and Customs

The Society agrees with this clause.

It will be important given the terms of Clause 25 (6) that the Commissioners are suitably qualified in relation to their functions which are conferred by acts of the Scottish Parliament and which relate to devolved taxes.

Clause 26 – Scottish rate of income tax

Clause 26 inserts a number of sections into the Scotland Act 1998.

The Society is concerned that only a partial regulatory impact assessment has been completed in relation to the Bill and that in the explanatory notes at paragraph 232, the financial effects and the effects on public sector manpower are not detailed.

The Society is of the view that collecting the Scottish rate for Scottish taxpayers will be a considerable administrative effort. More information is needed about how the Scottish rate will be administered and the costs for taxpayers, employers and the Scottish Government. The Society notes that these costs would be incurred even where the rate set by the Scottish Government is the same as the UK rate.

In particular, the Society is concerned that payroll standards written before the Scottish rate of income tax comes into effect will take some time to test in order to confirm their capability. A considerable amount of underlying administrative work requires to be undertaken in order to ensure the proper administration of the tax in a fair and equitable way so as to give certainty to PAYE taxpayers that the tax deducted from their salary is correct and to avoid underpayments or overpayments.

New Section 80C – Power to set Scottish rates for Scottish taxpayers

The Society notes that the Parliament may, by resolution, set the Scottish rate for the purpose of calculating the rates of income tax to be paid by Scottish taxpayers. The Society is of the view that this mechanism will need to be related to the Scottish budget process and that the terms of the resolution will require to be consulted upon by any Scottish Government proposing such a resolution.

Section 80D – Scottish Taxpayers

The Society is concerned about the definition of ‘Scottish Taxpayers’ contained in new Section 80D as amplified by new Section 80E and F particularly with reference to residence.

New Section 80D defines a Scottish taxpayer as an individual:-

"a) who is resident in the UK for income tax purposes; and

b) who for that year meets condition a), b) or c)" these conditions are; that the taxpayer has a close connection with Scotland, does not have a close connection with any part of the United Kingdom other than Scotland and spends more days of the year in Scotland or is an elected Parliamentary representative for Scotland.

The residence qualification is not without controversy as recent cases (Gaines-Cooper v HMRC and Tucza v HMRC) confirm.

New Section 80D (when combined with new Section 80E and 80F) are difficult to interpret for those who move between jurisdictions within the United Kingdom inasmuch as they create some uncertainty and potential problems regarding compliance.

For example the definition of "close connection" contained within new Section 80E, creates difficulties of interpretation. Furthermore, what does "place of residence" mean? It appears to be different from "residence" as understood in other areas of tax law such as Capital Gains Tax. Does "place of residence" imply ownership when juxtaposed against "main place of residence" in new Section 80E(3)(b) and (c).

"Place of residence" and "main place of residence" are not defined in new Section 80E and therefore create potential problems for interpretation by those who may live in Scotland yet work in England or visa versa, including those living on the Scottish/English border, commuters from Glasgow/Edinburgh to London and a variety of public officeholders who may have a "place of residence" in Scotland yet work considerable periods in England and Wales such as members of the House of Lords (who are not included in new Section 80D(4) or UK Supreme Court judges.

New Section 80E also highlights the issue of split year residences. HMRC currently applies, in extra statutory concession A11 split year treatment to individuals who spend only part of the tax year resident in the United Kingdom. The concession means that for example an employee who comes to the UK for a secondment beginning on 1 June would be regarded as non UK resident and therefore not taxable in the UK on his or her general earnings from the same employment for the period from 6 April to 31 May of that tax year.

The Society questions whether setting up the provisions of new Section 80D, E and F will require the creation of a similar extra statutory concession. It would seem more sensible to create a robust system which does not rely on extra statutory concessions in order to make it work, but rather that the fundamental architecture takes account of movement of people within the United Kingdom (and therefore within different tax zones) within the one tax year.

The provisions will need some amendment to deal with changes in residence status of a number of categories of employee, including those working onboard ship, in oil rigs, in the armed forces and who are neither UK resident nor employed by non-UK employers.

New Section 80G – Supplemental powers to modify enactments

The Society is concerned about the terms of new Section 80G which enables the Treasury, by order, to disapply provisions of the Income Tax Act 2007 or to modify those provisions in relation to any enactment.

There is no obligation on HM Treasury, contained within these provisions, to consult and it is clear that any order modifying or disapplying any enactment would be taken through the UK Parliament. The Society believes that the Treasury should be under such an obligation to consult with interested parties including the Scottish Ministers and the Scottish Parliament on the terms of such orders under new Section 80G(1) and (2).

The Society also is of the view that more information should be required from the Government about what is intended to be disapplied under new Section 80G(1). Indications have been made to the effect that elements relating to Gift Aid and pensions might fall under the terms of this provision. The Society believes that there should be more transparency about this issue. The Society also questions whether these provisions apply to income from rent where the Scottish taxpayer holds land from which he or she is obtaining rent which is located in England and Wales. It would appear that a Scottish taxpayer will pay the Scottish rate on such income where an English taxpayer who obtains rent from a property leased in Scotland, will not. This seems, at the least, to have the potential for confusion on the part of the taxpayer.

It is also a matter of concern that an order made under these provisions can take effect retrospectively. The case for such application needs to be made out.

Clause 27 – Income tax for Scottish taxpayers

The Society has no comments to make on this clause.

Clause 28 – Scottish tax and transactions involving interests in land

1. The S ociety is concerned that the enabling provision in the new Section 80 I of the Scotland Act 1998 sets out the scope of what is to be a Scottish tax on Scottish land transactions using English land law terminology. An estate or interest in land, whilst not unknown to Scots law, is certainly not in common usage. The S ociety believes that Section 80 I (1)(a) should refer to "the acquisition of land in Scotland (including any interest, right or power in or over such land)" and that "estate" should be omitted from the new Section 80I (1)(b).

2. The S ociety does not believe that it is necessary to include the provisions in Section 80I(2) (a), (b) and (c). It is appreciated that the scope of Scottish land tax should be set out and it is assumed that these provisions are intended to be permissive, but the S ociety is concerned that the inclusion of this degree of detail risks limiting the framework for the new Scottish land tax.

Clause 29 – Disapplication of UK stamp duty land tax

The Society agrees with this clause.

Clause 30 – Scottish tax on disposals to landfill

The Society agrees with this clause.

Clause 31 – Disapplication of UK landfill tax

The Society agrees with this clause.

Clause 32 – Borrowing by the Scottish Ministers

The Society has no comments to make.

Clause 33 – Maximum penalties which may be specified in subordinate legislation

Section 113 (10) of the Scotland Act 1998 (subordinate legislation: scope of powers) prohibits the making of subordinate legislation conferred by the Act in respect of any criminal offence punishable:-

a) On summary conviction, with imprisonment for a period exceeding three months or with a fine exceeding the amount specified as level 5 on the standard scale;

b) On conviction on indictment, with a period of imprisonment exceeding two years

The Society notes that this provision is to be replaced with Clause 33 (2) of the Bill which in effect raises the maximum penalties in respect of which offences cannot be created under subordinate legislation conferred by the 1998 Act on summary conviction to reflect those as contained in the Criminal Proceedings, etc. (reform) Scotland Act 2007, namely 12 months imprisonment and level 5 fine on the standard scale.

Section 113 (9b) as inserted by Clause 33 (2) of the Bill applies where, if the offence is triable on indictment or on summary complaint, then the limits are 12 months imprisonment and the statutory maximum fine and Section 113 (9b)(c) as inserted by Clause 33 (2) of the Bill applies where the limit is for a period exceeding two years when triable on indictment.

The maximum penalties which may be applied to offences created in England, Wales and Northern Ireland remain the same and are provided for in terms of the new Section 113 (10) of the Act as inserted by Clause 33 (2) of the Bill.

Clause 33 (3) of the Bill creates a new Section 113(12) of the Act to allow these limits to change by Her Majesty by Order in Council.

The Society notes that such an order is subject to type A procedure as provided for in Schedule 7, Paragraph 1 to the Act which means that no recommendation to make such subordinate legislation is to be made to Her Majesty in Council unless a draft has been laid before and approved by resolution of each House of Parliament and also the Scottish Parliament.

The Society supports this proposal which in effect takes into account changes to maximum penalties upon conviction on summary complaint and as provided for at Section 5(2)(d) of the Criminal Procedure (Scotland) Act 1995 as inserted by Section 43 of the 2007 Act which raised the maximum period of imprisonment which can be imposed by a sheriff sitting as a court of summary jurisdiction from three months to 12 months.

Level 5 on the standard scale at present £5,000 (Section 225(2) of the Criminal Procedures (Scotland) Act 1995 remains unchanged.

Clause 34, – Interpretation, Clause 35 – Power to make consequential, transitional and saving provision, Clause 36 – Transitional provision for Scottish statutory instruments, Clause 37 – Financial provision, Clause 38 – Commencement, Clause 39 – Short title

The Society has no comments to make on these clauses.

Schedule 1 – Amendments to Schedule 1 to the 1998 Act

The Society has no comment to make.

Schedule 2 – Insolvency

The Society has no comment to make.

Schedule 3 – Scottish Rate of Income Tax: consequential amendments

The Society has no comment to make.

Schedule 4 – Scottish Tax on Land Transactions: consequential amendments

The Society has no comment to make.

Additional issues

Devolution issues and acts of the Lord Advocate

The Advocate General referred to the consultation issued by him on the application of devolution issues procedure to acts of the Lord Advocate as prosecutor (Scotland Bill Committee Official Report 14 December 2010 col 53). The issue was whether devolution issue procedure should continue to apply to the Lord Advocate and to what extent. This issue is not addressed on the Bill as the Advocate General is determining policy following on the report of the expert group. The Society is of the view that change in this area is undesirable and a copy of our Memorandum of Comments on this issue is attached as an appendix to this Memorandum.

January 2011