Image source, bbc

SNP MSP Maree Todd says 18 offices in Scotland with the loss of 2,000 jobs which is causing a lot of concern.

Ms Todd says the majority of workers think this will affect the ability to collect tax.

Jim Harra from HMRC says it has made £700m a year cost efficiencies, but also brought in an additional £8bn revenue.

Mr Harra says a key part of the changes is the introduction of digital services and he says they are not behind in introducing them. 

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SNP MSP and Committee convener Bruce Crawford says in the Memorandum of Understanding it is clear how IT costs would be resolved, but not so with administrative costs.

Sarah Walker from HMRC says in the area of IT the Scottish government may want to get in an independent expert, but in other costs it is not amenable to get another expert in to ask.

In April 2017, the Scottish Parliament will receive a package of powers. These include;

• power to set the rates and bands of income tax on non-savings and non-dividend income
• half the share of VAT receipts in Scotland being assigned to the Scottish government's budget
• and power over Air Passenger Duty and Aggregates Levy

The formal transfer of those powers from Westminster to Holyrood has now taken place.

Image source, Getty Images

What new tax powers came to Scotland in 2016?

In April this year a Scottish Rate of Income Tax was introduced. It meant that...

• of the 20p now being paid from £1 of basic rate income, 10p of that is going to be levied by the Scottish Parliament
• and that 10p amount could be varied up or down.

In February this year, Scotland's then Treasury Secretary, John Swinney, choose not to vary the figure. And why not? Well, the minister believed the new power was inflexible as he will not have full control over bands and rates of tax.

Image source, bbc

Mr Harra says in his submission the necessary changes to HMRC’s IT systems and processes to accommodate the Scottish rate of income tax (SRIT) have been successfully delivered.

Sarah Walker from HMRC says the cost so far has been £12m, mostly down to IT and communications.

Ms Walker says the overall estimate is between £25m and £30m.

Mr Crawford says this is a good thing as it is a significant reduction. 

Image source, bbc

Mr Crawford says this is the first time in Scotland's history that it will set income tax, "so this is historic stuff you are involved in."

Jim Harra says there are three projects ongoing: 

• HMRC implementation of the Scottish Rate of Income Tax (SCRIT)
• Additional income tax  powers
• relief at source

Image source, bbc

Jim Harra from HMRC says he is happy to give evidence to the committee saying it will show it is spending the Scottish government's money wisely.

Mr Harra says HMRC has been working closely and effectively with the Scottish government.

The Finance and Constitution Committee , externalconvener Bruce Crawford gets us underway by introducing the witnesses.

• Jim Harra, Director General Customer Strategy and Tax Design, HMRC
• Sarah Walker, Deputy Director Devolution, HMRC

HMRC provided answers on:

• IT Systems and Processes
• Legislation  
• Compliance   
• Identification of Scottish Taxpayers – accuracy of data  

Image source, bbc

• Differences between PAYE and Self-Assessment data  
• Timing and transparency of in-year data to inform income tax forecasts   
• Level of data provided to the Office for Budget Responsibility in relation to income tax forecasts compared to the level of data which can be provided to the Scottish Government/Scottish Fiscal Commission  

Read the full HMRC submission to the Finance Committee here, external.

In advance of the session HMRC was invited to provide a written submission covering the following topics:

• Update on HMRC’s progress in taking forward relevant elements of the Fiscal Framework including the provision of relevant data to the Scottish Government and Scottish Fiscal Commission (SFC)
• Update on how the Scottish Rate of Income Tax (SRIT) is working so far
• Update on preparations for the full devolution of income tax rates and bands
• Identification of Scottish taxpayers – accuracy of data  

• Differences between PAYE and Self-Assessment data
• Timing and transparency of in-year data to inform income tax forecasts
• Details of level of data provided to the Office for Budget Responsibility (OBR) in relation to income tax forecasts compared to the level of data which can be provided to the Scottish Government/SFC
• Memorandum of Understanding with the Scottish Government; and  Details of relationship between the SFC and HMRC 

Image source, Getty Images

The Scottish Parliament has officially taken on significant new tax powers with the formal transfer of control from Westminster.

Orders have been passed in the House of Commons giving Holyrood control over income tax powers worth £12bn.

Control over income tax rates and thresholds is being devolved under measures agreed in the Scotland Act.

Both the UK and Scottish governments welcomed the "landmark" powers, which take effect from 2017/18.

• How is Scotland's tax system changing?

The Finance Committee will take evidence on the draft budget from:

• Jim Harra, Director General Customer Strategy and Tax Design, HMRC
• Sarah Walker, Deputy Director Devolution, HMRC

Good morning and welcome to Holyrood Live on Wednesday 14 December 2016.

First up this morning we will bring you full coverage of the Finance Committee as it takes evidence on the draft budget from HMRC. 

In the chamber this afternoon we begin with portfolio questions which focuses on the finance and constitution brief and then economy, jobs and fair work.

Image source, Getty Images

The Scottish Conservatives will then lead a debate on the economy.

After decision time, SNP MSP Maree Todd leads this evening's members' debate on Scotland's climate targets.