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Scottish VAT assignment – Summary of VAT assignment model.
The Treasury HMRC and the Scottish government have jointly published a paper outlining the methodology for calculating Scottish VAT receipts – the Scottish VAT assignment model.
It is based on HMRC’s VAT total theoretical liability model which is an internationally recognised method for calculating the theoretical amount of VAT that should be received by a tax jurisdiction.
The UK and Scottish governments will seek comments on the new Scottish VAT assignment model in early 2019.
The Scottish fiscal framework agreement in February 2016 set out the basis for assigning VAT to the Scottish government leaving the full methodology to be developed in time for implementation in 2019-20. Under the Scotland Act 2016 the UK government agreed to assign the first 10p of the standard rate of VAT and the first 2.5p of the reduced rate of VAT raised in Scotland to the devolved government.
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