By David Scott
26 June 2010
Councils in Scotland would lose millions of pounds if their legal right to chase up local tax debts was restricted to five years, leading finance officers have warned.
Currently, local authorities have up to 20 years to take legal action to reclaim tax arrears. However, a Bill being proposed before the Scottish Parliament aims to cut this period to five years.
The proposer of the Bill, Scottish National Party MSP John Wilson, argues that this would bring councils into line with the debt-collecting arrangements for ordinary creditors. He believes the change would encourage more effective debt collection and give individuals a greater chance of challenging the debt.
However, CIPFA in Scotland’s response to the proposal says it fails the test of the institute’s local taxation principles, specifically ease of collection and administration.
The institute has calculated that the change would mean that £17m worth of local taxation could not be collected on an annual basis.
A test covering the potential loss of income over a three-year period found that councils would have been precluded from collecting a total of £50m.
The institute acknowledged the ‘significant gap between the prescription period of 20 years and the proposed period of 5 years’ but said no research had been conducted on how long councils needed to carry out necessary diligence.
CIPFA Scotland policy manager Don Peebles said: ‘We believe that any consequences for local taxation should be considered only against the wider changes to devolved fiscal powers which could be introduced later in 2010 by the UK government.’
CIPFA in Scotland made the submission with its local government directors of finance section.
26 June 2010
Councils in Scotland would lose millions of pounds if their legal right to chase up local tax debts was restricted to five years, leading finance officers have warned.
Currently, local authorities have up to 20 years to take legal action to reclaim tax arrears. However, a Bill being proposed before the Scottish Parliament aims to cut this period to five years.
The proposer of the Bill, Scottish National Party MSP John Wilson, argues that this would bring councils into line with the debt-collecting arrangements for ordinary creditors. He believes the change would encourage more effective debt collection and give individuals a greater chance of challenging the debt.
However, CIPFA in Scotland’s response to the proposal says it fails the test of the institute’s local taxation principles, specifically ease of collection and administration.
The institute has calculated that the change would mean that £17m worth of local taxation could not be collected on an annual basis.
A test covering the potential loss of income over a three-year period found that councils would have been precluded from collecting a total of £50m.
The institute acknowledged the ‘significant gap between the prescription period of 20 years and the proposed period of 5 years’ but said no research had been conducted on how long councils needed to carry out necessary diligence.
CIPFA Scotland policy manager Don Peebles said: ‘We believe that any consequences for local taxation should be considered only against the wider changes to devolved fiscal powers which could be introduced later in 2010 by the UK government.’
CIPFA in Scotland made the submission with its local government directors of finance section.
