Scotland’s ‘no’ to independence last month returned confidence to the markets with a spike in sterling and share prices of FTSE 100-listed Scottish companies.
The legal profession breathed easy too as while independence would have signalled a surge of work over the first few years, long term the outlook was tied to uncertain economic fortunes.
However, the future is not settled, with a promised greater devolution of responsibilities now expected to proceed in addition to the income tax and debt raising powers already coming under the Scotland Act 2012. Devolution will increase this further with Lord Smith of Kelvin appointed to oversee the process and draft clauses due to be brought forward by January 2015.
Speaking to Legal Business after a majority ‘no’ vote was confirmed, CMS Cameron McKenna senior partner Penelope Warne, who also heads its energy practice and established the Aberdeen office, said: ‘The biggest takeaway is that at least we have the major uncertainty resolved as we have an outcome. There will still be uncertainty as to what extent there is more devolution, which powers will be transferred from Westminster to Scotland. Whenever there is change there is a need for new legislation and I see the major areas where that will fall as the tax arena and energy. But it might be wider than that.’
In tax, the main question is where powers to impose new taxes will lie. Increases in corporation tax may still see businesses shifting their headquarters south of the border affecting corporate work while higher income and property taxes could drive high-net-worth individuals to other jurisdictions.
‘Whenever there is change there is a need for new legislation and I see major areas where that will fall.’
Penelope Warne, CMS
Brodies’ managing partner Bill Drummond said: ‘The focus should be on how further devolution can contribute to economic growth and job creation.’ If tax rates can be lowered, it might provide the opportunity for Scotland to lure companies northwards and in energy, the creation of a new oil and gas authority, based in Aberdeen, will now go ahead and could also generate more revenue.
Signs of both Holyrood and Westminster governments being able to work amicably together promises positives for further economic recovery and greater work for the industry. Kirk Murdoch, Pinsent Masons chairman for Scotland and Northern Ireland, said: ‘I would imagine, in some cases because of the result, but in most cases because of the early signs of both governments getting on and settling the devolution, there will be more confidence that business can see what’s coming, and get on and do those deals that were on the table, and hopefully on the back of that continue the economic recovery.’
michael.west@legalease.co.uk