DEBT WRITE-OFF PROCEDURES CODE OF PRACTICE LUTON BOROUGH COUNCIL CORPORATE FINANCE

Transcription

1 APPENDIX A DEBT WRITE-OFF PROCEDURES CODE OF PRACTICE LUTON BOROUGH COUNCIL CORPORATE FINANCE revised March /4

2 This document can be made available in alternative formats or languages. Anyone wishing to request this document in an alternative format or language should contact the Exchequer Services Manager on or by at 1.0 INTRODUCTION DEBT WRITE-OFF PROCEDURE CODE OF PRACTICE Detailed in this code of practice are the procedures to be followed in writing-off Luton Borough Council debts invoiced through the debtors system. All debts of the Council will be actioned in accordance with Financial Regulations. If the debt remains unpaid, after exhausting all appropriate recovery methods, the debt should be written off. Collection of income is one of the Council s highest priorities in conjunction with the Corporate Plan theme of a financially sound and efficient Council. However, there are circumstances where debts arise and where to continually pursue for payment is unlikely to prove cost effective or possible. The Council s Financial Regulations should also be considered alongside this code of practice. 2.0 GENERAL PROVISIONS Liaison with other services with good reporting mechanisms are key to ensure that any ongoing service provision is stopped where recovery of debts is proving difficult, and any arrears are being considered for write-off. A service cannot be withdrawn where the Council has statutory responsibility to continue to provide it. Following the write-off of a debt, should any information become available that could lead to the recovery of the debt, then the debt can be resurrected and write-off reversed subject to part or all of the balance being paid. The source providing cost centre to whom the debt is owed and against whose budget the debt will be charged if written off, is referred to in this code as the Service Department. The Corporate Finance Service will liaise with the appropriate Service Department s Cost Centre Manager in relation to debt recovery and debt write-off. The Exchequer Services Manager is responsible for ensuring there is an effective strategy in place for monitoring the progress of outstanding debts. 3.3/5

3 The review and write-off of outstanding debts is an on-going process, as a minimum the actions outlined in this code will be undertaken on a quarterly basis. 3.0 WRITE-OFF OF DEBT The following outlines the general conditions and circumstances when a debt may be considered for write-off. They are not specific to any particular type of debt and are designed to cover the vast majority of debt considered for write-off. This list is not exhaustive and there may be other instances when it is appropriate to write-off a debt for a reason other than those stated: Uneconomical to recover: the cost of recovery is likely to outweigh or equate to a significant proportion of the balance outstanding; Untraceable debtors: if a debtor can not be found after making all efforts to trace them; Uncollectable as recovery options exhausted: all types of recovery have been attempted and there are no further options available; Bankruptcy/insolvency: if a debtor is declared bankrupt/insolvent/administrative receivership cases and it isn t possible to recovery any monies from the debtor s assets; Debts for a limited company or partnership that has ceased to trade leaving no known assets. Deceased: if the debtor has died and there is either no estate or no available funds from the estate; Time limited debt: if after the end of six years from the date the debt became due it hasn t been possible to commence to continue recovery in that period; The physical and/or mental condition of the debtor; Debts which cannot be legally enforced; Debtor is in prison confined to a long term prison sentence; External debt collection agents have advised they are unable to collect. 4.0 OUTLINE OF DEBT WRITE-OFF PROCEDURES 4.1 Debts up to and including 3000 (including aggregated debts for one debtor) Where the normal recovery procedures have failed to obtain payment and the debt is not greater than 3000 the Exchequer Services Manager will review whether recovery is likely or if, in the light of efforts and costs to date, it is uneconomical to pursue recovery any further. If, as a result of this review, the debt(s) is considered to be uncollectable or uneconomic to pursue further it can be written-off by Exchequer Services Manager. In cases of debts raised by the Housing & Community Living Department, the Finance Manager within that service will recommend whether debts can be written off. For this procedure to operate effectively and with the minimum delay, it is necessary to assume that the Service Department accepts the judgment of 3.3/6

4 the Exchequer Services Manager on the likelihood of recovery of the debt. Therefore debts below 500 will be referred for write-off without consulting with the Service Department in this instance. However, once the debt has been written off the cost centre managers will be advised. For debts in excess of 500, the Service Department will be notified of the impending action and requested to approve the referral for write-off, or alternatively suggest further recovery methods or provide more information appropriate to the case. 4.2 Debt exceeding 3000 but not exceeding Where the normal recovery procedures have failed to obtain payment and the debt(s) is greater than 3000, the debt shall be referred to either the Head of Legal Services or Head of Corporate Finance for write-off. In this instance, the Service Department will be notified of the impending action and requested to approve the referral for write-off, or alternatively suggest further recovery methods or provide more information appropriate to the case. 4.3 Debts exceeding In this case, once all recovery methods have not succeeded, the debt(s) should be referred by either Corporate Finance or the Finance team within Housing & Community Living Department in conjunction with the Head of Legal Services, to the Executive. As described in paragraph 4.2, the service Department will be notified of the impending write-off and requested to approve the referral for write-off. SUMMARY OF WRITE-OFF LIMITS Values Up to but not exceeding 3000 Debts exceeding 3000 but not exceeding Debts exceeding Authority/Approval to Write-Off Exchequer Services Manager or H&CL Finance Manager. Head of Corporate Finance or Head of Legal Services Executive 5.0 RETENTION PERIODS To comply with the requirements of the Council s Standing Orders all documentation supporting write-offs of debts shall be retained in respect of the current year plus the previous seven years. 3.3/7

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