Scottish Police Value Added Tax (VAT) liability

Back to all Motions

2012 Police & Justice Conference
14 June 2012

The Scottish Government has put a Police and Fire Reform bill before Parliament. One of the aims of the bill is to realise considerable savings through the efficiencies of rationalisation. The new Police Service for Scotland will involve an amalgamation of the current 8 Forces and Scottish Police Services Authority (SPSA) into one Scottish Force. A similar arrangement will exist for the Scottish Fire & Rescue Service.

Given the insistence of the Scottish Government that they will maintain Police Officer numbers at the current level of 17234, the burden of the budgetary cuts will fall on Police Staff. Association of Chief Police Officers (ACPOS) have estimated that this will mean at least 2400 police Staff posts out of 7000 will have to go as a minimum. This is after we have lost 1000 staff members in the last year.

The Scottish Government has stated that from year two, they expect the Force to realise cumulative savings of £1.2 billion over 15 years.

Unison Scottish Police and Justice Staff have been fighting these cuts vigorously, campaigning for a balanced workforce rather than one where staff jobs will be lost to be replaced by more expensive, ill prepared and untrained Police Officers.

At present, the 8 Scottish Police forces are able (under Section 33 of the Value Added Tax Act 1994) to recover VAT costs incurred. However SPSA, who deal with Training, Forensics and IT for the Scottish Forces are currently liable for £5M of VAT per annum as they currently have a similar status to the proposed Police Service of Scotland.

A move to a single service will alter this. The Scottish Government has assumed that a single service will be liable for irrecoverable VAT on all goods, estimated to be around £22m per annum – the Scottish Fire Service will also be liable for up to £7m.

The VAT liability therefore has a potential to be worth approximately 20% of the savings required. In turn, this equates to approximately 880 Police staff jobs which could be saved.

UNISON has had confirmation from HM Revenue and Customs and HM Treasury that the service will not be given Section 33 status and will therefore be unable able to recover all VAT incurred.

The Police Service of Northern Ireland (PSNI) was granted VAT exemption under Sect 99 of the 1994 VAT Act when it was created.

Forces in England and Wales are similarly not liable for VAT- even following the implementation of Elected Police Commissioners.

It is in the best interests of our members to campaign for the Police Service of Scotland to maintain the same VAT arrangements that currently exists for the 8 Scottish Forces as well as all of the Forces in England, Wales and Northern Ireland. It seems absurd that by re-organising to obtain efficiencies of scale, the Government has made the new organisation liable for such a large amount.

The Westminster Government cannot be allowed to not only cut back on Policing Budgets across the country, but to have a double whammy of clawing Tax back into the treasury.

Unison Scottish Police and Justice Staff call on Conference to put the might of the Unison campaigning machinery behind this campaign to stop this blatant Tax grab from happening.

The coalition Government in Westminster has the power to change this unjust law to align all of the Police Forces in the United Kingdom.

Strathclyde Police & Fire Branch