Scotland’s police and fire services could become exempt from paying VAT after the prime minister announced the Treasury was considering the matter.
SNP Westminster leader Ian Blackford raised the issue at PMQs, saying Scottish emergency services had been deprived of £140 million since 2013 and were the only police and fire services in the UK to be charged VAT.
Prime Minister Theresa May said Treasury officials were about to report back, which suggested an announcement could be made as early as next week’s budget.
Mrs May added she had also been lobbied “constructively” by Scottish Tories and the SNP had known VAT would be charged when the forces were nationalised.
She said: “The chief secretary has made it clear officials in Her Majesty’s Treasury will look at this issue, and they will report on it in due course.
“I am pleased to say very constructive representations have been made by my Scottish colleagues on the Conservative Benches on this particular issue.
“Let us just be clear – before the Scottish Government made the decision to make Scotland’s police and fire services national rather than regional bodies, they were told this would mean they would become illegible for VAT refunds, and they pressed ahead despite knowing that.”
Speaking outside the chamber, Mr Blackford said he welcomed the broadly positive response but added a refund as well as an exemption was needed.
He said: “I’m pleased there seems to be an indication the government may finally change its position, as it should have done long ago.
“Given the fact the government has finally conceded this is wrong we should be refunded the £140 million held back from frontline services since 2013 as well.
“The decision to create Police Scotland had broad, cross-party support in the Scottish Parliament.”
Mr Blackford also refuted the suggestion Mrs May had been persuaded by Scottish MPs in her own party, saying the SNP had asked 30 times already for the change.
He said: “It is the SNP that has led the charge on this – Scottish Conservatives won’t back us in making sure we get the repayment for the last three years.
“That is a considerable sum that could be reinvested back into frontline services.
“It’s an absolute disgrace we have had to fight for so long to get back money that is rightly ours.”