Welsh Revenue Authority “operating effectively” and Welsh Treasury “obtaining appropriate assurance” over HMRC’s implementation of Welsh Rates of Income Tax, says Auditor General
The Welsh Revenue Authority and Welsh Treasury are working well to implement plans to transfer certain taxes and borrowing powers from the UK Government to the National Assembly for Wales. That’s according to a report published by the Auditor General for Wales.
His update report concludes that the Welsh Revenue Authority is operating effectively to administer Land Transaction Tax and Landfill Disposal Tax, which were both transferred to Wales on 1 April 2018. It also found that the Welsh Treasury has appropriate arrangements in place to obtain assurance over HM Revenue and Customs’ implementation of Welsh Rates of Income Tax.
The Welsh Revenue Authority was set up effectively to meet its key challenges. It has administered the two devolved taxes appropriately to date and has taken steps to be able to respond to potential future developments -including working with the Welsh Treasury where appropriate.
The total cost of implementing the Welsh Rates of Income Tax is yet to be finalised but is estimated to be between £7.7 million and £9.7 million. Most of that cost relates to HMRC activity. The Welsh Treasury is taking an active part in arrangements to transfer responsibilities for Welsh Rates of Income Tax to Wales and is getting appropriate assurance from HMRC over its processes to identify Welsh taxpayers. The methods used to forecast the revenue due to Wales from Welsh Rates of Income Tax are appropriate and the Welsh Treasury is exploring ways to improve underlying data.
The report also found that the Welsh Treasury and HMRC are working together effectively to communicate with the public over Welsh Rates of Income Tax. Plans to engage are clear, proportionate and identify measures of success clearly. Survey results should allow the Welsh Treasury to measure public awareness of Welsh Rates of Income Tax over time and plan future communications activity.
The report identifies a number of areas of focus for the Welsh Revenue Authority, including:
- The creation of strategic partnerships to maximise its digital capability.
- The review of joint governance arrangements with the Welsh Treasury.
- The development of its 3 year corporate plan by 31 March 2019.
The report also identifies areas of focus for the Welsh Treasury regarding Welsh Rates of Income Tax:
- In partnership with HMRC, developing an appropriate governance structure before Welsh Rates of Income Tax start to be collected in April 2019.
- Maintaining access to timely and accurate data, to allow accurate forecasting of revenue due each year
- Confirmation of the final total project cost and a cost sharing arrangement with the Scottish Government for any costs that relate to both the Welsh and Scottish income tax system.
The Auditor General for Wales, Adrian Crompton, said:
“I’m pleased to see that the Welsh Revenue Authority and Welsh Treasury are both working well to prepare and deliver their duties in delivering fiscal devolution in Wales. We’re still in a critical phase, with the Welsh Rate of Income Tax being introduced in just over 3 months’ time. My report provides some points to consider which should help them to continue what is an effective operation so far.”