In addition, combined authorities and all newly created fire and rescue authorities in Scotland will be able to recover VAT in the same way. Presently they can only do so once individual Treasury orders have been enacted.

This measure will be effective from April 2018.

The tax base is the current level of irrecoverable VAT paid by the Scottish Police Authority and the Scottish Fire and Rescue Service. This is calculated using information in their annual accounts.

The other affected authorities are not currently incurring irrecoverable VAT so do not form part of the tax base.

The static cost is the total value of irrecoverable VAT for the Scottish Police and Scottish Fire and Rescue Services. The measure will allow the bodies to recover VAT in full because they would be able to claim VAT refunds for all of it.

There is no additional cost associated with the other combined authorities and newly created fire and rescue authorities, since they replace bodies which can already recover VAT to the same extent.

The measure is likely to cost an estimated £40m a year, although the impact costing document states that ‘the main uncertainty in this costing relates to the value of VAT refunds’ as the government is not able to quantify the full effect for the Scottish Police Authority and the Scottish Fire and Rescue Service.

Early in 2018, the government will publish an initial consultation on the impact of VAT and airline passenger duty (APD) on tourism in Northern Ireland, to report at Budget 2018.