Scotland devolution report: Potential 'chaos' looms as Scottish government is 'unprepared' for new tax powers

Scotland's government is said to be unprepared to deal with the enhanced tax powers promised by Whitehall and faces potential "chaos" it tries to process payments and deal with the regulatory reality of the Scotland Act.

According to an Audit Scotland report, when new tax powers come into force next April the country will be saddled with payments that may take longer to process and costs which could escalate.

"The Scottish government successfully developed the legislative framework for the devolved taxes, but it must ensure that staff and systems are fully in place to manage the increased responsibilities that the Scotland Act brings," said Caroline Gardner, auditor general for Scotland.

"We now need to hear from the Scottish government about how they will ensure that the biggest transfer of fiscal powers from London in 300 years happens on time and without the budget spiralling out of control."

On 18 September, over 80% of Scots turned out to vote in the independence referendum.

Around 55% of Scots voted against independence after Whitehall pledged to grant greater powers over taxation and the control of some benefits to the country.

The Smith Commission has since laid out recommendations into what new enhanced Scotland should be granted and how it will affect the rest of the UK.

Enhanced powers include control over income tax and a range of welfare policies.

Audit Scotland's main gripe is that the government has delayed the hiring staff and the setting up of new IT infrastructure in order to facilitate the implementation of new tax powers.

However, Scotland's deputy first minister John Swinney, insisted that both recruitment and IT operations were on track for 1 April next year.

"We have robust plans in place to ensure smooth delivery of the service," he said.

"This report rightly acknowledges that establishing the arrangements for our new financial powers is a 'large and complex programme of work'. Establishing a new tax collection agency from scratch is a major operation – Revenue Scotland staff are rising to that challenge and I welcome Audit Scotland's recognition of the excellent work done on policy development and legislation."