Out-Law News | 04 Aug 2014 | 11:18 am | 2 min. read
Kirk Murdoch, chair of Pinsent Masons, the law firm behind Out-Law.com, in Scotland and Northern Ireland said that even in the event of a 'no' vote, the Scottish corporate world would still need to prepare for the introduction of new powers contained in the 2012 Scotland Act. New property and landfill taxes will be introduced in Scotland from April 2015 and from 2016 there will be a separate Scottish income tax rate.
"This not only has implications for the likes of payroll systems, but for financial products which have tax relief features, so employers will have to prepare for those changes regardless of the referendum result," he said.
"The next three to five years are difficult to predict with any amount of certainty but leaving aside the referendum outcome, change is on the cards and we are actively helping organisations of all shapes and sizes keep up to speed on developments," he said.
KPMG questioned 137 Scottish senior business figures as part of its latest Business Instincts Survey between April and May this year. Almost 84% of respondents said that they had not yet considered a continuity plan for how to deal with the impact of a 'yes' vote on 18 September, which Craig Anderson of KPMG Scotland said suggested that they "probably do not feel sufficiently informed to make appropriate long-term plans".
Of those questioned, 29% said that potential changes to the tax regime as a result of independence were of particular concern to their business while almost one quarter raised the issue of a possible change in currency. A further 21.9% of respondents said that the possible impact of independence on cross-border trade with the rest of the UK was their biggest concern.
Kirk Murdoch of Pinsent Masons said that any changes would not be immediate, but that Scots law would "essentially have to catch up as we develop equivalent legislation in areas covered by UK law at the moment".
"The most obvious and pressing subjects would be tax, currency, European Union membership, legal entity structures and regulation," he said. "A whole new tax structure would be needed. Would businesses have to incorporate separately as Scottish companies? If Scotland was outside of the EU for even a short period of time, we would have to have a legal response to provide cover for a lot of existing European law which we currently adhere to."
"Currency would dominate. If we don't use sterling, contracts and agreements may have to be renegotiated and much work would be needed on establishing separate payment structures. If an independent Scotland was to have a different corporation tax rate, how would that be applied to organisations situated outside of Scotland and would they need to set up a subsidiary company? Throw in potential change to how we treat assets, property, employment law and labour relations - and, of course, the big issue of pensions - and it's easy to see there would be a huge requirement for businesses to understand the differences and what they must do to comply."
Murdoch said that Scottish businesses may also face "a lack of clarity as to what comes next" in the event of a 'no' vote.
"At this time, the main political parties have set out some proposals for change but any further devolution from Westminster to Holyrood won't be finalised and agreed until after the next UK general election in May – and we won't know the political make-up of the next government, which will no doubt have other pressing items on their agenda which need prioritised," he said.