PLANS to strip private schools of tax breaks risks making them ‘second class charities’, ministers have been warned.

The Scottish Government has also been told the proposals undermine legislation which regulates all charities.

The concerns are raised in a series of emails from civil servants and officials from the Office of the Scottish Charities Regulator (OSCR) revealed under freedom of information legislation.

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Because private schools are charities they qualify for an 80 per cent discount on business rates, but a review last year set up by the Scottish Government recommended the relief should be abolished.

In December, the proposal was backed by Finance Secretary Derek Mackay who said it was “fair and consistent” because state schools do not qualify for rates relief.

However, internal documents from the Scottish Government’s Charity Law and Volunteering Team reveal concerns about the consequences of the policy were expressed as early as June 2017.

Officials warned the plans “would essentially create a two tier system for charities” and lead to “a class of charities who receive less favourable treatment than others”.

They also raised the issue of whether removal of rates relief - worth some £5 million to the sector - would be better dealt with under a wider campaign to challenge the charitable status of private schools.

Documents state: “If the real issue is whether these organisations should be charities in the first place, this would be better addressed by looking at, and potentially amending, the charity test in the 2005 charity act, rather than subjecting them to what is essentially a financial penalty.”

When asked to comment on the finalised recommendation of the review, government officials reiterated their concerns and warned the proposed change threatened the “integrity of charity test”. Emails less than two weeks later indicated that OSCR had the same concerns.

“Overall [the OSCR] thought the report was making it seem like these changes would be easy and straightforward, but all the complexities/unintended consequences haven’t been fully considered or explored.”

A separate OSCR briefing paper on the Barclay Review also draws attention to the potential undermining of Scotland’s charity test.

It states: “There is a sense in which there is a de facto devaluing of the charity status of certain groups of charities that currently have charity status.

“Allowing the creation of a two tier charity sector, and ultimately maybe more layers, would be messy and could be damaging to the charity brand.”

John Edward, director of the Scottish Council of Independent Schools, said it was “no surprise” to hear concerns being raised.

He said: “We told the Barclay Review and the government that singling out independent schools would run contrary to the charity test the Scottish Parliament created and would set independent schools aside from all other registered bodies for no sound legal, political, educational or economic reason.

“The charity test for Scottish independent schools is the strictest in the world and schools have worked incredibly hard over twelve years to meet that test.”

Liz Smith, education spokeswoman for the Scottish Conservatives, called on the government to change its approach.

She said: “We know from the minutes of OSCR meetings that there was disquiet among officials that the finance secretary had not consulted them on his plans to remove the charitable relief on business rates for independent schools.

“We know there is also concern among other government officials that the effects of this policy have not been thought through, specifically when it comes to how the policy applies to nurseries and special needs pupils.”

A Scottish Government spokesman said the changes would not amount to a change in change in charity law.

He added: “As per the recommendations of the Barclay report, this is a proposed change to non-domestic rating provision. We propose to retain relief eligibility for special schools and are giving further consideration to how we ensure that independent schools with exceptional circumstances – such as specialist music schools – continue to be eligible.

“We will continue to engage with the sector as we finalise the detail of our proposals, subject to which we intend to bring forward primary legislation to deliver this change by 2020. This will allow time for those schools affected to plan ahead.”