Written Statement - Collection and Management of Devolved Taxes

I am announcing today further detail about the collection and management arrangements for Welsh devolved taxes from April 2018.

The Tax Collection and Management (Wales) Act 2016 was agreed unanimously by the National Assembly for Wales on 8 March and received Royal Assent in April 2016. The Act establishes the foundations for our devolved tax regime, including the establishment of the Welsh Revenue Authority (WRA). The powers within the Act provide the WRA with flexibility, as a new tax authority, to draw on the capacity and capability of other bodies by delegating its tax collection and management functions.

In June 2015, the Welsh Government announced the WRA would work with HM Revenue and Customs (HMRC) to collect and manage Land Transaction Tax (LTT). HMRC would undertake the transactional and routine compliance functions, and the WRA would undertake complex compliance, avoidance and enforcement work for LTT.

The WRA would also undertake most of the collection and management functions for Landfill Disposals Tax (LDT) and would delegate compliance and enforcement to Natural Resources Wales (NRW).

It was also announced that further discussions will be held with HMRC in relation to the collection and management function for LTT and with NRW for compliance and enforcement for LDT. In all cases where functions are delegated, the WRA will retain the legal responsibility for them and will continue to hold the legal powers to exercise them. Tax policy and strategy will be set by Welsh Ministers.
Since then, we have undertaken a significant amount of work with HMRC to better understand how the current UK Stamp Duty Land Tax (SDLT) and Landfill Tax operate. We have also reviewed carefully the types of systems and operations potentially on offer from both HMRC and NRW, followed by detailed work with both organisations to further clarify how they would be able to provide services to Welsh taxpayers.

I would like to take this opportunity to thank HMRC and NRW for their commitment and engagement with the Welsh Government over the last year to ascertain the best way forward for collection and management of devolved taxes. Both bodies have significant relevant expertise and the WRA will continue to work closely with them to build a Welsh tax authority which can meet the needs of Welsh taxpayers. I would also like to thank the Scottish Government and Revenue Scotland, which have provided invaluable advice and support.

I confirm today that WRA will undertake all the collection and management functions for LTT (with HMRC providing expertise and knowledge through loans and secondments to develop and enhance the WRA’s LTT compliance expertise). WRA will undertake most of the collection and management functions for LDT and will work with NRW on compliance and enforcement of LDT.

We will continue to work closely with HMRC to build on its expertise and experience in tax collection, compliance and enforcement. This arrangement will help to ensure WRA has the capability it needs. I am also pleased to continue working with NRW, which has unique experience and skills specific to landfill and has established relationships with landfill site operators.

This is an exciting opportunity for Wales and an important step along the path of devolution. I am confident WRA can deliver a high-quality service in the collection and management of LTT and LDT. WRA has the opportunity to implement high-quality tax processes, enhance customer service standards with digital services, which are in line with Welsh needs and priorities and build a platform with the flexibility to manage and collect future taxes if required. We will continue working closely and collaboratively with all our stakeholders at every level.

It is vital the WRA is established and operates in the most cost-effective manner. In November, the Welsh Government published estimates of costs for the establishment and operation of the WRA. At the time, it was estimated the WRA would cost £4.8m to £6.3m to establish between 2016-17 and 2018-19 and operating costs would be in the region of £2.8m to £4.3m annually from 2018-19. I expect set up and operating costs to be within the previously published range.

In the autumn we will begin the appointment process for the first chair of the WRA. I will be seeking a diverse range of candidates for this key role to reflect the public the WRA will serve. I intend the chair to be in post from early 2017 to enable the authority to recruit a board it feels best represents the interests of the people of Wales.