Clear guidance is needed to explain how a new tax, land transaction tax, which will replace stamp duty in Wales will work, according to a National Assembly for Wales committee.
In agreeing with the general principles of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill, the Finance Committee has recommended the Welsh Revenue Authority (WRA), a new organisation established to collect devolved taxes, should work closely with professional bodies from the outset to establish clarity on how the two taxes will work.
The power to collect taxes on transactions involving land was devolved under the Wales Act 2014 and will come into effect in April 2018.
The WRA itself came under the spotlight with the Committee wanting assurances the body will be ready to collect taxes from day one and will have suitable resources and IT infrastructure in place to operate effectively.
The Committee also wants clarification on how the law will effect cross-border properties. It was concerned that there was no definitive map of such properties in relation to the border and committee members were concerned that the provisions for establishing the amount of tax which was due and to whom were confusing and unclear to the taxpayer.
The Committee believes this issue needs clearing up as a matter of urgency.
“A replacement for stamp duty is necessary as Wales will lose a portion of its funding through the block grant,” said Simon Thomas AM, Chair of the Finance Committee.
“While the Committee has agreed that this Bill should proceed, we also want to see much clearer guidance from the Welsh Government as to what the land transaction tax is and how it will work.
“We want to see assurances that the Welsh Revenue Authority, which will be responsible for collecting taxes raised, will be ready to collect taxes and offer advice from day one.
“We also believe that the issue of cross-border properties should be cleared up as a matter of urgency as we heard a confusing explanation of what property buyers would owe and to whom.”
The Committee makes 18 recommendations in its report, including:
- That the WRA engage with the relevant professions from the outset on the production of LTT guidance.
- That the Cabinet Secretary provides updated estimated costs before any Stage 2 proceedings, with particular reference to IT and establishment costs; and
- That further information is produced by the Welsh Government explaining how it intends the legislation to determine the apportioning of the consideration payable on cross-border property transactions.
The Committee’s report will now be considered in a full meeting of the National Assembly before a vote on whether the Bill can proceed to the next stage of the law-making process.