Part 2 – Key Concepts
Section 3 – Levy to be charged on purchase of overnight accommodation
15.Subsection (1) specifies the type of transaction which may be subject to a levy (a “chargeable transaction”) and confirms that the levy becomes payable when a visitor takes entry to the accommodation. The term “chargeable transaction” is defined in subsection (2) to mean a purchase of the right to reside in or at overnight accommodation for a period of one or more nights. Subsection (3) confirms that the reference to a night means any period, including any combination of periods, of 6 or more hours between 12 noon on one day and 12 noon on the following day which includes midnight.
Section 4 – Meaning of overnight accommodation
16.Subsection (1) defines “overnight accommodation” to mean a room or area provided to a visitor for residential purposes at the particular types of accommodation listed in subsection (2); but this does not include accommodation provided to a person as their only or usual place of residence. The types of accommodation which may be subject to a levy do not include a local authority gypsy and traveller site or a registered social landlord gypsy and traveller site (see subsection (3)). Neither do they include accommodation in vehicles or on board vessels that are undertaking a journey involving one or more overnight stops. This will mean, for example, that the provision of a cabin on a ferry or a sleeper train, or the hiring of a campervan, will not typically be subject to a levy. However, the levy would be chargeable on the overnight parking of a campervan at a campsite, meaning that the “accommodation” provided by the liable person is the area of the campsite allocated to the visitor for the purpose of the visitor’s overnight stay in the campervan.
17.The list of accommodation types in subsections (2) and (3) can be amended by the Scottish Ministers by way of regulations, by adding or removing a type of accommodation, or varying the description of a type of accommodation (subsection (4)). Subsection (5) requires the Scottish Ministers to consult local authorities and such persons as they consider to be representative of communities, businesses engaged in tourism and tourist organisations, as well as such other persons as they consider appropriate before making any regulations under subsection (4). Regulations under subsection (4) are subject to the affirmative procedure (subsection (6)).
Section 5 – Calculation of levy
18.This section sets out how the levy will be calculated in respect of a chargeable transaction. Subsection (1) provides that the levy which is to be paid in respect of an overnight stay is arrived at by multiplying the percentage rate of the levy (set by a local authority under section 6) by the “accommodation portion” of the transaction. Subsections (2) and (3) define the “accommodation portion” of the transaction to mean the amount charged for the accommodation, not including any reasonable costs for facilities or services provided such as meals or drinks, entertainment or parking (unless the area used for parking is the “accommodation” provided by the liable person, for example in the case of a campervan parking at a campsite – see paragraph 16 above). The calculation of the levy can be expressed as a simple formula as follows:
Levy chargeable = Accommodation portion of transaction x % rate of levy.
19.Subsection (4) contains a regulation making power for Scottish Ministers to add to, remove or vary the facilities or services which are not to be treated as forming part of the accommodation portion of the chargeable transaction. Such regulations are subject to the negative procedure (subsection (5)).
Section 6 – Rate for levy
20.This section requires a local authority seeking to introduce a VL scheme to set the percentage rate of the levy chargeable in respect of the purchase of overnight accommodation. Different rates can be set for different purposes or areas (subsection (2)(a)), meaning that a local authority could, for example, set different rates in relation to particular events, such as arts festivals or special conferences. However, different rates may not be set for different types of accommodation (subsection (2)(b)).
21.Subsection (3) gives the Scottish Ministers the power to specify in regulations the maximum percentage rate that a local authority may set under subsection (1). Different maximum percentage rates may be set for different purposes, but not for different areas (subsection (4)). Subsection (5) sets out the organisations and people who must be consulted before making regulations under subsection (3): local authorities, such persons as the Scottish Ministers consider to be representative of communities, businesses engaged in tourism and tourism organisations, and anyone else they consider appropriate. Regulations made under subsection (3) are subject to the affirmative procedure (subsection (6)).
Section 7 – Maximum number of nights of overnight accommodation
22.Section 7 allows a local authority introducing a VL scheme to specify a maximum number of nights that are subject to the levy. The nights must be in one chargeable transaction over consecutive nights. A local authority may only specify a maximum number of nights under subsection (1) after consulting such persons considered to be representative of communities, businesses engaged in tourism and tourist organisations, as well as any other persons as the local authority considers appropriate (subsection (2)).
Section 8 – Person liable to pay levy
23.Section 8 provides that the person liable to pay the levy to a local authority under a VL scheme is the person who provides the overnight accommodation and is the occupier of the premises at which the overnight accommodation is provided (i.e., the liable person); in practice, this is likely to be the owner or tenant of the premises who provides the accommodation. Whilst the liability to pay the levy to a local authority in respect of a chargeable transaction falls on the liable person, that person will be able to recover an amount equivalent to the levy from visitors on the basis of the contract entered into between them for the purchase of the overnight stay.
Section 9 – Third party arrangements
24.Section 9 allows a liable person to arrange for a third party (which could be an online booking agent, for example) to carry out certain functions in connection with the levy on behalf of the liable person. The functions which may be carried out by a third party under such an arrangement are listed in subsection (1) and are: the collection of a sum equivalent to the levy from visitors, the making of a return to the local authority under section 26 (but only if the local authority consents to this – see subsection (2)), and the payment of the levy to the local authority under section 29. Subsection (3) confirms that where a third party carries out functions on behalf of a liable person, the liable person’s obligations under the Bill are unaffected; as a result, the obligations to make returns and payments to the local authority under sections 26 and 29 remain the responsibility of the liable person.
Section 10 – Billing of overnight accommodation
25.Subsection (1) gives the Scottish Ministers the power to specify in regulations requirements for the billing of overnight accommodation. These may require providers of accommodation to issue invoices to visitors who purchase accommodation which include a breakdown of the total cost of the accommodation, the amount attributable to the accommodation itself (i.e., the accommodation portion), the percentage rate of the levy and the amount of levy payable (subsection (2)(a)). Regulations made under this section may also require the providers of overnight accommodation to publish the costs of the accommodation available for purchase, including the amount attributable to the accommodation portion, the percentage rate of the levy and the amount of levy payable (subsection (2)(b)). It is noted that subsections (2)(a)(iii) and (b)(i) both contain references to “any deduction made under section 5(1)(b)”. However, due to Stage 3 amendments made to section 5(1)(b) of the Bill for the Act there are no such deductions and so these references to what might be included in the regulations are now redundant. Regulations made under this section are subject to the negative procedure (subsection (3)).
Section 11 – Exemptions and rebates
26.Under this section, the Scottish Ministers may, by regulations, create particular exemptions from the liability to pay the levy and provide for cases in which the levy may be reimbursed (subsection (1)(a)). For example, regulations may provide that the levy is not chargeable where a person purchases overnight accommodation for the purpose of accessing hospital treatment in the area in which the scheme operates. Regulations under this section may also provide for the issuing of exemption vouchers to certain categories of persons to allow those persons to demonstrate that they qualify for a particular exemption from the levy (subsection (1)(b)). Taking the example above, exemption vouchers could be issued to persons attending a hospital for medical treatment. These vouchers might then be retained by the liable person to evidence the fact that the transaction was not subject to the levy.
27.The Scottish Ministers, without prejudice to the generality of subsection (1), may also specify a maximum number of nights which are subject to the levy (subsection (2)). The regulations may provide for an exemption from or rebate of the levy in relation to a single or multiple chargeable transactions at the same overnight accommodation for consecutive nights (subsection (3)(a)). Subsection (3)(b) also allows for the Scottish Ministers to specify the method of calculating the relevant amount of the levy given that the method of calculation may change the levy payable. For example, the calculation may disregard nights beyond the maximum number or use an average nightly cost over the length of the stay (to account for surge pricing). Regulations may specify different maximum numbers of rights for different purposes, but not for different areas (subsection (4)).
28.Before making any regulations under this section, the Scottish Ministers must consult local authorities, such persons as they consider to be representative of communities, businesses engaged in tourism and tourist organisations, as well as such other persons as they consider appropriate (subsection (5)). Regulations made under this section are subject to the affirmative procedure (subsection (6)).
