Willie Rennie - Image credit: Policy Exchange

Scottish Lib Dem leader Willie Rennie has written to Finance Secretary Derek Mackay to urge him to change the status of Police Scotland to exempt it from VAT.

He is calling for Police Scotland to be made into a single shared local government body, which would exempt the organisation from VAT, rather than a non-departmental public body, which it is at the moment.

The single shared service model was advocated by COSLA and public sector union UNISON before the Police Scotland merger in 2013.

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VAT payments cost Police Scotland around £35m a year and earlier this week Mackay called for Scotland’s police and fire services to get VAT relief at a meeting of UK finance ministers.

Most police and fire services in the UK do not pay VAT because they have section 33 exemptions as local government-funded bodies.

Police Scotland lost the VAT exemption when the previous eight forces were merged into one and became funded by the Scottish Government.

Commenting on the letter, Rennie said: “Ministers were fully aware of the issues VAT would present when they chose to undertake their centralisation drive and abolish the regional police forces, yet they ploughed on regardless.

“Nonetheless with Police Scotland facing a £200 million funding black hole it is essential that other parties work constructively to repair the damage caused by the Cabinet Secretary’s predecessors.

“That’s why I am writing to the Cabinet Secretary today to propose changes, supported by COSLA, that would allow Police Scotland to be exempted from VAT.”