Police Scotland cannot reclaim £76m VAT bill from last three years

From BBC News on 10/06/2016

Scotland’s single police force has paid £76.5m in VAT since it was formed three years ago and remains the only UK force unable to reclaim the tax.

Police Scotland Chief Constable Phil Gormley revealed the figure in a letter to the Commons Home Affairs Committee.

Local police and fire services were exempt from VAT but this ended with the creation of national bodies in 2013.

The VAT issue remains controversial as Audit Scotland recently warned Police Scotland faced an £85m funding gap.

Westminster’s Home Affairs Committee recently requested information from Police Scotland regarding its work training police forces of foreign governments.

At the end of a submission, sent on 2 June, Chief Constable Gormley stated: “Finally you ask, in reference to a question posed by Mr McDonald (SNP MP Stuart McDonald), how much VAT Police Scotland is unable to reclaim, or has paid.

“Since Police Scotland was formed in April 2013 we have paid £76.5M in VAT and we remain the only police organisation in the United Kingdom to pay VAT.”

The situation arose as policing and fire services in Scotland were previously controlled by local council which can claim back VAT.

The new national forces are controlled by the Scottish government, which cannot.

The anomaly was known about when the Scottish government was piloting its single forces Bill through Holyrood.

It has since lobbied Westminster for a reintroduction of the VAT exemption, without success.

Following the committee meeting, a Scottish government spokeswoman said: “We remain deeply concerned about the glaring disparity of treatment between the service in Scotland and those in other parts of the UK where none of the other 44 forces have to pay VAT.

“We will continue to press the UK Government to bring their VAT status into line with all other British and Northern Irish Forces, as requested in the letter of 24 February 2016.”

Recent concerns about budget shortfalls within Police Scotland have ensured that the issue has remained topical.

In October last year, the Scottish Police Authority, which oversees the national force, heard that Police Scotland was facing a £25m budget overspend by the end of the financial year.

Two months later, then Finance Minister John Swinney announced an extra £55m in funding for Police Scotland in his draft budget.

The same week, financial watchdog Audit Scotland warned of “significant issues” in the force’s accounts, with a potential funding gap of £85m developing by 2018/19.

The annual VAT bill for the single Scottish Fire and Rescue Service is estimated to be about £10m.