MSPs have been warned if they do not agree new income tax rates then "it won't be collected", potentially causing a £11.8bn financial black hole.

Former civil servant Jim Gallagher, who helped draft legislation which transferred income tax powers to Holyrood in 2016, warned the Treasury may have to intervene.

Income tax is a temporary tax which has to be reset each year before the end of the financial year.

Following the passing of the Scotland Act 2016, Holyrood sets all income tax bands and rates with HMRC continuing to administer and collect the funds.

When asked by STV News what will happen if Holyrood does not pass an income tax resolution, Gallagher said: "First, they don't have spending powers so local authorities and public services do not get the money they need.

"And second, of course, they do not have any tax powers either. So that's a problem with collecting the Scottish rate of income tax."

He added: "Well, if the Scottish Government decides not to set a Scottish rate of income tax or can't set a rate, then the new Scottish rate of income tax won't be collected.

"The Treasury might step in to keep the pay-as-you-earn (PAYE) system running but nobody knows what happens then."

A spokesman for the UK Government told STV News: "The setting of the Scottish Government's budget is a matter for the Scottish Government and the Scottish Parliament."

A memorandum of understanding signed by the Scottish Government and HMRC in December agreed "income tax rates, bands and the thresholds" will be set each year through a resolution passed by the Scottish Parliament" and it must be passed by April 5, the start of the financial year.

MSPs will vote on an income tax resolution separately from the devolved budget later this month.

A Scottish Government spokesman said: "The Scottish Government's income tax proposals are dependent on parliamentary approval of a Scottish rate resolution (SRR).

"This is a requirement of the legislation introduced by the UK Government and passed by the UK Parliament.

"The Scottish Parliament must provide the legal authority for HMRC to collect income tax before the start of the next tax year.

"We are working with political parties to secure parliamentary approval for the budget and the SRR and can introduce a SRR for debate at any time before stage three of the Budget Bill."

Stage one of the budget will be debated on Thursday by MSPs.

MSPs usually pass the budget on to its second stage but it is unclear if the convention will be maintained as the each political party has different views on what income tax rates should be.

If no budget can be passed before the end of March then a fresh Holyrood election will be called to try to break the stalemate.

The SNP holds a minority of seats and has to rely on at least one other party choosing to abstain or vote with them to pass the budget and the SRR.