iN the financial year 2009-10 Scottish Borders Council wrote off over £1.6 million of unpaid council tax, non domestic rates, sundry debts and housing benefit overpayments.
A debt will only be written off when it is uneconomic to pursue it any further; the debtor becomes insolvent and there is little chance of any dividend being paid to ordinary creditors; all options of recovery have been exhausted by the council’s legal team and sheriff officers; and a professional assesment is made that recovery of the debt is unlikely, such as when sheriff officers advise that there are no assets of the debtor can’t be traced.
The amount of bad debt has since reduced and the council is undergoing a review of all processes and procedures with a report due to go before councillors in March this year.
Scottish Borders Council’s chief financial officer, David Robertson, told members of the council’s executive at a meeting yesterday (Wednesday): “Of the £4 million aged debt identified in May 2011, approximately £1.5 million has been collected, £0.2 million of charges have been reduced following disputes and £0.1 million has been writtten-off. The remaining £2.2 million is subject to on-going investigation, recovery or collection.
“During 2011 extra resources (£297,000) have been deployed to reconcile and collect current and aged sundry debt. Specialised credit controllers are currently in the process of categorising older debt into that which remains collectable, bad debt and debt where legal action is in process.
“It is anticipated that there will be a consequent increase in the rate of write-offs towards the end of 2011 as a result of this work.
“A new policy on debt recovery has now been drafted and will be brought forward for consideration by elected members.”
The most common reason for non payment of the non domestic rates is businesses becoming insolvent, while for those owing Council Tax the most common reason for the council to give up chasing them is where there is no forwarding address (350 cases in 2010 and 146 in 2011). But before writing off the debt the council will have searched existing council databases, used whatever local knowledge is available and also employed tracing agents. For the recovery of housing benefit overpayments the council also has access to the Department for Work and Pensions database and other local authorites housing benefit data to trace debtors.
Financial regulations allow the council’s chief financial officer to write-off individual irrecoverable debts of up to £100,000. Any debt in excess of that can only be written off as irrecoverable with the approval of the council’s executive. A report on the amount of debt that is written off has to come before the executive committee annually.