Policy paper

Scottish VAT assignment – Summary of VAT assignment model

The VAT assignment model calculates the Scottish share of UK VAT for the purposes of Scottish VAT assignment.



Under the Scotland Act 2016, the UK Government agreed to assign the first 10p of the standard rate of VAT (20%) and the first 2.5p of the reduced rate of VAT (5%) raised in Scotland to the Scottish Government.

This paper outlines the Scottish and UK Governments’ implementation of the assignment of Scottish VAT and details the methodology for calculating Scottish VAT receipts - the Scottish VAT assignment model.

The model outlined in this paper was jointly developed by HM Revenue and Customs, the Scottish Government and HM Treasury. It is based on HMRC’s VAT Total Theoretical Liability model, which is an internationally recognised method for calculating the theoretical amount of VAT that should be received by a tax jurisdiction.

The UK and Scottish Governments will seek comments on the Scottish VAT assignment model from key stakeholders in early 2019 and will announce further details over the next few weeks.

For any general enquiries on the Scottish VAT assignment model, please contact HM Treasury at the following email address: HMTVATandExcisePolicy@hmtreasury.gov.uk.

Published 22 November 2018