36.This section sets out the steps to be taken by a person in calculating their liability to pay the levy. The section allows for payments of the levy to be calculated in the accounting periods for a financial year (i.e. the year in which tax is paid, which is defined as a financial year under subsection (3) as ending on 31 March or such other 12-month period as may be set by Ministers by regulations). The accounting periods are to be determined under regulations made by the Scottish Ministers under section 19. The accounting periods may be for parts of the financial year or the whole of that year.
37.The levy is charged on a taxable building control event for an accounting period, with those events for that period being identified at Step 4 of subsection (1). Before reaching that Step the person paying the levy (“the taxpayer”):
	(Step 1) calculates the total building control events for new residential units which have occurred in the accounting period for units owned by the taxpayer when the building control application was made (note the owner at this earlier point is liable here whether or not they still own the unit at the point of the building control event);
	(Step 2) deducts from that total all building control events which have occurred in the accounting period for which the taxpayer is entitled to relief;
	(Step 3) deducts from the remaining total the appropriate levy-free allowance for the accounting period, having calculated that appropriate allowance by (a) disregarding any part of the levy-free allowance for the whole financial year which has been used in an earlier accounting period for the same financial year and (b) applying the remaining amount of the allowance to the earliest building control events in the accounting period.
38.Step 4 therefore classifies all (or where there is some remaining levy-free allowance, the most recent) remaining building control events in an accounting period as the taxable building control events. The rate set out under section 10 is then applied to each individual taxable building control event for the accounting period (Step 5) and the total of each of those calculations is the levy payable for the accounting period (Step 6).
39.Subsection (2)(a) confirms that if there are zero or fewer building control events left for an accounting period after Step 2 or 3, then no levy is payable in that accounting period. Subsection (2)(b) also provides clarification, in this case about the deduction at Step 3 in a scenario where part of an allowance is used in an accounting period. For example, for an annual allowance of 25, if the first accounting period has 10 building control events, the calculation at Step 3 for that first accounting period results in a figure of minus 15. Nevertheless, an allowance of 15 will remain for the second accounting period, on the basis that only 10 were “used” for the first accounting period. Example calculations for a financial year are set out in the table below.
40.The example assumes that the accounting periods are set as quarters and that a developer is responsible for a total of 75 building control events (BCEs) in the whole financial year, with 10 falling in quarter 1 (AP1), 15 falling in quarter 2 (AP2), zero falling in quarter 3 (AP3) and 50 falling in quarter 4 (AP4).
41.For the purposes of the example, it is assumed that reliefs apply to 5 of the Q1 events; 10 of the Q2 events, zero of the Q3 events and 17 of the Q4 events (noting that there are no reliefs included on the face of the Act, although these may be added under section 11 regulations and, if they are, they would be deducted from the calculation under Step 2 of section 10(1)). Finally, for the purpose of the example, it is assumed that the levy-free allowance is set for the whole year under section 12 as 25 BCEs.
42.Regulations may be made under this section to define the 12-month period that constitutes the “financial year” for the purposes of this Act. However, before making such regulations, the Scottish Ministers must consult Revenue Scotland, persons whom the Scottish Ministers consider represent the interests of the residential property development sector, and such other persons as the Scottish Ministers consider appropriate.
Commentary on Provisions Part 3 – Calculation and Use of Levy Section 10: The calculation of total levy payable by a person