Could HMRC say no to a local income tax?

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I don't usually give much time to the Telegraph, but noticed a story there that suggests the Lib Dems and Scottish Nationalists are likely to work together to form an administration in Scotland after the May elections and that they might want to create a local income tax.

Interestingly, it's suggested that HM Revenue & Customs might not cooperate with them to do so. I'm the first to say that local income tax (even on a devolved national basis) will create massive admin problems, but I can think of nothing more likely to create Scottish independence than a refusal by a government in London to let Scotland settle its local tax system. So I hope someone is doing the homework on how to make this possible.

And if they are they might extend it UK wide. Our current local taxation system is horribly regressive.