Scotland refuses £7m IT upgrade request from HMRC

HM Revenue & Customs has sparked widespread outrage across Scotland following its demand that the Scottish Government pays to keep Edinburgh's power to increase income tax running.

The tax authority is calling for the IT software - which enables it to increase or reduce the basic rate of income tax in the country - to be upgraded at a cost of £7 million.

When the SNP government did not pay this fee by August this year, Scottish Secretary Michael Moore said that the government had 'allowed its tax-raising powers to lapse' by its failure to pay for the upgrade.

First Minister Alex Salmond said that Scotland had already paid – citing that a previous Scottish administration had paid £12 million for the IT usage upgrades, alongside a hefty £50,000 each year in running costs.

"Where decisions of United Kingdom departments or agencies lead to additional costs for any of the devolved administrations, where other arrangements do not exist automatically to adjust for such extra costs, the body whose decision leads to the additional cost will meet that cost," he went on to say.