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25 November 2014
Police chief critical of

Police chief critical of "bewildering" VAT charge

Scotland’s top police officer has said a UK Treasury decision not to allow the single service to recover VAT is “bewildering”.

Sir Stephen House reiterated his frustration to this morning’s meeting of the Justice Committee that Police Scotland, unlike forces elsewhere in the UK, is ineligible for VAT refunds, worth around £23m each year.

Scotland’s eight legacy forces were exempt from VAT but the Scottish Police Authority and Police Scotland, as central government bodies, have been saddled with different arrangements.

Cabinet Secretary for Justice designate, Michael Matheson, told MSPs he intended to “pursue this issue with vigour” as part of discussions with the Treasury, though it has been a longstanding one.

In June 2012, less than a year out from Police Scotland going live, his predecessor Kenny MacAskill said the decision was “unacceptable, unjustifiable and manifestly unfair”.

The chief constable of Police Scotland suggested that the bill is unlikely to increase going forward given the force is looking to reduce their purchasing spend, though it will remain “huge”.

“I am very happy to go on record and say £23m is a huge amount of money - it’s probably about 680 police officers worth,” said House. “I am not necessarily saying if we had the £23m we would spend it on that but it would be good to have that money
“I am not a tax expert by any shape of the imagination but I do find it bewildering that we seem to be the only police service in the United Kingdom that is charged VAT. None of the 43 forces in England and Wales pay it.

“And the answer seems to come back from the Treasury, ‘oh, that’s because you’re a central government organisation’. Well you’ve got the Police Service of Northern Ireland, they don’t pay VAT. And you’ve got the National Crime Agency and they don’t pay VAT - but we pay VAT. 

“I just don’t understand the logic of it and I frankly don’t think the Scottish public would understand it either really. It hasn’t been explained to me in a way I can understand.”

Matheson said Treasury ministers would be free to make a decision on the matter “at the stroke of a pen if they choose to do so”.

“The present situation is completely unacceptable and I’ll certainly be pursuing the matter further with the UK Treasury to try and get a change of policy in this area,” he added.

Meanwhile, Matheson – who was appointed on Friday following a cabinet reshuffle – said the SNP’s commitment to 1,000 extra police officers is one that he intends to take forward as Cabinet Secretary.

It comes despite police officer costs making up almost three-quarters of the force’s budget, with claims that a Scottish Government pledge to keep officers above 17,234 has seen civilian support staff suffer the brunt of budget cuts.

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