It could be a thyroid issues so you may want to have your vet do a thyroid test. It could also be a yeast or staph type infection. You could have your vet do a skin scraping and culture to diagnose the exact skin issue.
If you are given meds for the skin and it doesn't clear up I would see a Dermatologist. I would have saved a lot of money in vet bills with my Gypsy if I had seen a Derm. sooner but my vet kept saying he didn't feel I needed to. A Dermatologist may seem expensive but in the long run if you have to see a vet several times those bills add up.
Hope you can find the cause quickly. I'm including a link to Central Illinois Sheltie Rescue. They have some great info on thyroid disease.
http://www.illinoissheltierescue.com/thyroid.html