£6m in debtors’ unpaid arrears scrapped by South Lanarkshire Council
South Lanarkshire Council (SLC) is set to write off an estimated £6,000,000 in unpaid revenue, it has announced. Its financial committee has, however, emphasised that provision is in place to cope with some of these losses.
Missed tax revenue
The council has attributed the total sum of £6,086,783.18 to a number of different streams:
- Domestic rates. Debtors owe around £4,500,000, of which £2,541,000 is from traders entering liquidation or otherwise ceasing trading. An extra £2,042,000 from 2014/2015 will be cancelled as the three-year collection deadline has passed.
- Council tax. A combination of prescribed debt, sequestrations and probate-related sums account for around £629,000.
- Housing rent. Unpaid sums, largely by former tenants, add up to approximately £318,000.
- Housing benefit. Overpayments contribute a further £112,000.
- BID levies. Some £17,451 is due from Business Improvement Districts.
Councillors also explained that SLC is owed an additional £538,000 in smaller sums, classified as ‘sundry debt’.
The committee highlighted that it has accounted for the £2,042,000 that will be absorbed due to the three-year rule, meaning it won’t impact the regional budget for the coming months.
Safeguarding against arrears
Despite the unpaid revenue, councillors reported that they were already 4.9% ahead of their target for tax collection. They have currently recouped more than £2,300,000 for this financial year.
The authority has also passed its target figure for non-domestic-rate arrears by 3%, having claimed back £2,580,000 from debtors.
Nonetheless, it is still experiencing difficulties in stabilising its smaller debt streams. It has collected around £6,600,000 in sundry-debt arrears.
Its financial committee is also currently ‘on track’ with tax, non-domestic rates and sundry debt for the financial year 2017/2018.
The importance of priority debt
These debts owed to a local authority or council are known as ‘priority debt’. This is because the consequences of not paying them are much greater for debtors than the consequences of, for example, commercial debt.
This is firstly because they are used to provide essential services, such as social housing, libraries, local transport or waste recycling, and secondly because of strict laws. Failure to pay can result in money deducted from a salary or taken from benefits, or court proceedings being opened, with the possibility of imprisonment.
Dukes Bailiffs Debt Recovery offers a range of debt repayment plans. For more information, get in touch here.