Audit Committee – 27 June 2025
Annual report of bad debts and write-offs
|
Purpose |
For Review |
|
Executive Summary |
This annual report to the Audit Committee provides a summary of the sums written-off in 2024/25 and the bad debt provisions for each debt. |
|
Recommendation(s) |
That Audit Committee note the contents of this report |
|
Reasons for recommendation(s) |
That the Audit Committee have awareness of the contents of the report. |
|
Portfolio Holder(s) |
Cllr Jeremy Heron, Finance and Corporate |
|
Strategic Director(s) |
Richard Knott - Strategic Director Housing and Communities |
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Officer Contact |
Ryan Stevens Service Manager – Revenues, Benefits and Customer Services |
1. This report is an annual report to inform Members of the total bad debts written-off during the financial year 2024/25.
2. The Council collects Council Tax, Business Rates, Sundry Income, Rent and Parking Charges and every effort is made to collect all sums by the most appropriate and efficient method. It is Council policy to take all practical steps to recover debts, including proactively working with households to provide support, advice and information, and we always encourage those in arrears to contact us so we can discuss their situation and circumstances. We continue to refer to, and work with, Citizens Advice New Forest.
3. The Council’s accounting systems provide automated recovery procedures for the collection of the debts, followed where applicable, by appropriate recovery, and all methods of recovery are considered and where appropriate pursued in line with legislative provision before recommending that debts are written-off, for example enforcement agents, tracing services and through the court. Writing-off a debt is the last resort after all avenues of recovery have been exhausted.
4. This report is prepared inaccordance with the policy for write-offs approved by Council.
5. Debts have been written-off in the following services during 2024/25:
· Council Tax
· National Non-Domestic Rates (NNDR)
· Housing Benefit
· Sundry Income
· Housing and Garage Rents
· Parking Penalty Charges
· Stores
6. The need to write-off debt can arise for a number of reasons, including:
· Abscond
· Liquidations and bankruptcies
· Deceased
· Small balances
· Enforcement Agent unable to collect/levy
· Foreign Vehicles
7. The total debt written off for 2024/25 was £1,422,912 (£995,619 for 2023/24). This represents 0.44% of the total income collected in 2024/25 of £317,287,000 (0.34% for 2023/24). Although some debts are written-off in 2024/25 they are not necessarily related to this year and are arrears from previous years due to the timescales involved in pursuing recovery of the debt, for example council tax, where the debt may be from a previous year, or years, and recovery has been exhausted.
8. The total written-off byeach service is detailed in Appendix 1, with Appendix 2 providing comparison values for 2023/24. The appendix also includes the average value of the amount written-off, the write-off as a percentage of annual income collected, and examples of write-offs criteria.
9. Write-ons are credited where debtors have overpaid and they cannot be traced. All reasonable avenues are explored prior to the credit being written back on. Housing Benefit write-ons are where a previous Housing Benefit overpayment debt which has been written-off is reversed to recover the amount.
10. The table below details the service andthe value of accounts that have had a credit on an account which has been written-on, together with comparative figures for 2024/25. The increase in National Non-Domestic Rates write-ons is due reviewing historic accounts and being unable to trace the business.
|
CATEGORY OF DEBT |
2024/25 £ |
2023/24 £ |
|
Council Tax |
88,625 |
75,506 |
|
National Non-Domestic Rates |
100,642 |
13,820 |
|
Housing Benefit overpayments |
Nil |
Nil |
|
Sundry Income |
776 |
792 |
|
Housing and Garage rents |
Nil |
3,145 |
|
TOTAL |
190,043 |
90,118 |
12. The total provision made for each type of bad debt write off and the total arrears as at 31 March 2025 is also shown in Appendix 1. Members should note, the total provision figures within Appendix 1 include the NFDC provision as outlined above, plus collection fund provisions which relate to other organisations (i.e. Hampshire County Council).
13. The bad debt provision for council tax and business rates are:
|
Stage |
% for provision |
|
Liability Order |
50% |
|
Final |
25% |
|
Reminder |
10% |
|
Bill |
5% |
14. For Housing Benefit overpayments, a provision of 100% is made for any debt which is greater than one year and 50% where the debt is being recovered by DWP. Where an overpayment is currently being recovered from ongoing entitlement, the migration to Universal Credit may result in an increase to the bad debt provision, socially as the recovery rates have reduced and there are priority debts which are recovered first.
15. For Sundry Income a provision is made for debts which are greater than one year with an adjusted provision for rent deposit schemes and rent in advance schemes where payment plans often exceed one year, and where we have more information, such as an agreed payment plan.
16. For existing Housing and Garage tenants a provision is worked out as follows:
|
Arrears (£) |
% of provision |
|
0-100 |
0 |
|
100-250 |
10 |
|
250-500 |
25 |
|
500-750 |
50 |
|
750-1,000 |
75 |
|
1,000+ |
95 |
17. A provision of 95% is made for debts of former tenant arrears.
18. Due to the ongoing impact of the cost of living it is expected to be challenging in 2025/26 to recover arrears brought forward from 2024/25, especially with Business Rates where we have seen an increase in insolvency ad subsequent debts being written-off in 2024/25.
21. There are none.
Consultation undertaken
22. The has been none.
Financial and resource implications
23. The Council is committed to maximising collection of sums due and will explore all available means before submitting a debt for write-off.
Legal implications
24. The are no legal implications arising from this report. All legal duties and processes with recovery of debts are followed.
Risk assessment
25. There are no risks relating directly from this report, however it is acknowledged that the impact of the cost of living, economic factors, and reduced court hearing dates for Council Tax and National Non-Domestic Rates, may impact on collection for 2025/26.
Environmental and climate and nature implications
26. There are no environmental and climate implications arising from this report.
Equalities implications
27. There are no equalities impact arising from this report. The recovery of debt is supported by the Revenues and Benefits Fair Collection and Debt Recovery policy.
Crime and disorder implications
28. There are no significant crime and disorder implications arising from this report.
Data protection, information governance and ICT implications
29. There are no significant data protection implications arising from this report.
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Appendices:
Appendix 1 - Write-offs in 2024/25 Appendix 2 – Write offs in 2023/24 |
Background Papers:
There are none |
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Appendix 3 – Revenues bad debt workings
Appendix 4 - Write-off authorisations
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APPENDIX 1 WRITE-OFFS 2024/25 |
||||||||
|
Category of Debt |
Total Write-off |
Number of Accounts |
Average value of write-off |
Annual Income / Turnover |
Provision Made 31/3/2025 |
Arrears balance as at 31/3/2025 |
Write-off as % of Turnover |
Reasons for write-off |
|
|
£ |
|
£ |
£ |
£ |
£ |
|
|
|
Council Tax |
398,051 |
1,016 |
392 |
160,401,000 |
2,516,930 |
5,996,000 |
0.2 |
Abscond, bankruptcy, deceased, enforcement agent unable to collect, other, small balance. |
|
NNDR |
553,220 |
87 |
6,359 |
74,885,000 |
351,850 |
1,350,000 |
0.7 |
Abscond, bankruptcy, no goods on which to levy, other, small balance. |
|
Housing Benefit Overpayments |
89,359 |
162 |
52 |
27,682,000 |
646,310 |
1,000,000 |
0.3 |
Abscond, bankruptcy, collection agency unable to collect, deceased, Local Authority/DWP error, small balance. |
|
Sundry Income |
239,154 |
271 |
882 |
13,946,000 |
819,650 |
4,401,000 |
1.7 |
Abscond, bankruptcy, small balance, deceased, uneconomical to pursue. |
|
Housing and Garage Rents |
137,705 |
289 |
476 |
35,705,000 |
1,030,000 |
1,644,000 |
0.4 |
Abscond, bankruptcy, deceased, collection agency unable to collect, individual voluntary agreement/debt relief order, old, small balance. |
|
Parking Penalty Charges |
5,325 |
101 |
53 |
4,668,000 |
30,794 |
89,907 |
0.1 |
Abscond, bailiff unable to collect/no goods on which to levy, bankruptcy, foreign vehicle. |
|
Stores |
98 |
|
|
|
|
|
|
Change in law, obsolete |
|
Total |
1,422,912 |
1,926 |
|
317,287,000 |
5,395,534 |
14,480,907 |
|
|
|
APPENDIX 2 WRITE-OFFS 2023/24 |
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|
Category of Debt |
Total Write-off |
Number of Accounts |
Average value of write-off |
Annual Income / Turnover |
Provision Made 31/3/2024 |
Arrears balance as at 31/3/2024 |
Write-off as % of Turnover |
Reasons for write-off |
|
|
£ |
|
£ |
£ |
£ |
£ |
|
|
|
Council Tax |
363,213 |
1,902 |
191 |
152,269,000 |
2,425,960 |
5,669,000 |
0.2 |
Abscond, bankruptcy, deceased, enforcement agent unable to collect, other, small balance. |
|
NNDR |
274,622 |
96 |
2,861 |
65,219,000 |
411,440 |
1,724,000 |
0.4 |
Abscond, bankruptcy, no goods on which to levy, other, small balance. |
|
Housing Benefit Overpayments |
74,937 |
305 |
246 |
27,386,000 |
683,120 |
1,098,000 |
0.3 |
Abscond, bankruptcy, collection agency unable to collect, deceased, Local Authority/DWP error, small balance. |
|
Sundry Income |
130,401 |
314 |
415 |
10,491,000 |
856,080 |
3,742,000 |
1.2 |
Abscond, bankruptcy, small balance, deceased, uneconomical to pursue. |
|
Housing and Garage Rents |
131,867 |
214 |
616 |
31,453,000 |
850,000 |
1,233,000 |
0.4 |
Abscond, bankruptcy, deceased, collection agency unable to collect, individual voluntary agreement/debt relief order, old, small balance. |
|
Parking Penalty Charges |
12,841 |
214 |
60 |
3,985,000 |
23,644 |
77,943 |
0.3 |
Abscond, bailiff unable to collect/no goods on which to levy, bankruptcy, foreign vehicle. |
|
Stores |
7,738 |
|
|
|
|
|
|
Change in law, obsolete |
|
Total |
995,619 |
3,045 |
|
290,803,000 |
5,260,244 |
13,543,943 |
|
|
|
|
|
NNDR Arrears by Recovery Stage |
|
|
|
|
|
Arrears |
Provision |
Provision |
|
|
£’000 |
% |
£’000 |
|
At Liability Order Stage |
508 |
60 |
304 |
|
At Reminder Stage |
333 |
10 |
33 |
|
At Bill Stage (by deduction) |
552 |
5 |
28 |
|
Total |
1,393 |
|
365 |
|
Reduction for Court Cost Arrears |
|
|
14 |
|
Total |
|
|
351 |
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SERVICE AREA |
SERVICE MANAGER RESPONSIBLE |
WRITE OFF / ON CRITERIA |
UPPER £ LIMIT PER DEBTOR |
|
Council Tax |
Revenues, Benefits and Customer Services |
Bankruptcy/Debt relief order Abscond Small Balance (up to £500) Deceased Enforcement Agent unable to collect/no goods on which to levy |
£10,000
|
|
Business Rates |
Revenues, Benefits and Customer Services |
Bankruptcy/Liquidation/Indiv vol agreement Abscond Small Balance (up to £500) Deceased Enforcement Agent unable to collect/no goods on which to levy |
£10,000
|
|
Housing Benefit (including Fraudulent cases) |
Revenues, Benefits and Customer Services |
Bankruptcy/Debt relief order Abscond Small Balance (up to £500) Deceased LA Error DWP Error Collection Agency unable to collect |
£10,000
|
|
Sundry Income |
Revenues, Benefits and Customer Services |
Bankruptcy/IVA/Debt Relief Order Abscond Small Balance (£500) Deceased Collection Agency unable to collect Uneconomic to pursue through the court |
£10,000
|
|
Housing Rents
|
Housing |
Bankruptcy/Indiv. Vol. Agreement / Debt Relief Order Abscond Small Balance (up to £500) Deceased Collection Agency unable to collect |
£10,000
|
|
Garages |
Housing |
Bankruptcy Abscond Small Balance Deceased |
£10,000
|
|
Penalty Charge Notices |
Street Scene |
Bankruptcy Abscond Deceased Bailiff unable to collect/ no goods on which to levy Foreign Vehicle |
£1,500
|
|
Stores |
Building Works |
Obsolete stock / Damaged stock Picking Error |
£1,500 |
|
Estates & Valuations |
Estates |
Bankruptcy Abscond Small Balance (up to £500) Deceased |
£1,500 |
|
|
Section 151 Officer |
Any write off/on including; Partial write offs of live accounts, paying accounts, large balances, any other exceptional reason |
No Limit |