Approval for write off

Report: 9
Date: 24 March 2011
By: Director of Resources on behalf of the Commissioner

Summary

MPA Financial Regulations require that individual cases for write-off, where the amount is above the delegated limit of £20,000, are referred to the Finance and Resources Committee for approval. This report sets out the circumstances of two individual cases that require such approval.

A. Recommendations

That Members:

1. Approve write off of the two irrecoverable sums set out in this report 

B. Supporting information

1. Invoices raised by Accounts Receivable have a maximum of thirty-day settlement terms although shorter terms may be applied in accordance with the conditions of individual sales agreements. The value of invoices not settled within the specified terms is a key performance indicator within both Finance Services and the Resources Directorate. Recognising the need to reduce the level of core and ageing debt, regular reviews are carried out to secure payment or reassess the likelihood of recovery.

Debt Recovery Performance

2. Sustained and proactive liaison with debtors by the Accounts Receivable credit controllers has maintained low levels of outstanding debt with a new record low level of overdue debt set at the end of the third quarter 2010/11 of £0.48m. This record low level of overdue debt is set against increasing numbers of invoices with 5,797 invoices at a total value of £151m issued in the first 3 quarters of 2010/11 financial year.

Irrecoverable Debt and Bad Debt Provision

3. Through proactively controlling outstanding invoices those customers where the debt is unlikely to be recovered can be identified. In such instances, and following every attempt to secure recovery, the debt can be recommended for write off against the bad debt provision. In line with MPA Financial Regulations any individual case in excess of £20,000, where write off is sought, is referred to this committee. There is one case referred for consideration, set out at paragraph 5 below.

4. The bad debt provision for 2010/11 is £0.327m, reduced from last year’s provision of £0.713m due to improved sales processes and accounts receivable’s continued success at reducing overdue debt. Subject to the approval of this request the provision will be reduced further to £0.209m.

Ed-Tel Promotions Ltd

5. In August 2008 services were provided to Ed-Tel Promotions Ltd for a fund raising concert held in Dagenham Park and an invoice for £33,597.95 raised. Ed-Tel Promotions Ltd made no attempt to pay and advised they were taking legal proceedings against a major act that failed to appear at their event. Between September 2008 and September 2009 MPS credit controllers pursued the debt by telephone and letter to both Ed-Tel Promotions Ltd and their solicitor. In September 2009 legal action to recover the debt was commenced against Ed-Tel Promotions Ltd. In August 2010 West London County Court awarded the MPS full settlement plus £6,000 costs as the respondent failed to appear. Following service of the judgement in September 2010 it was confirmed that Ed-Tel Promotions Ltd had ceased trading, had no residual assets and were in the process of being wound up by other creditors. It is considered that no further recovery action is possible and request that the debt is written off.

Salary overpayment

6. Members are also asked to approve write off in an individual case that refers to an overpayment of salary. In February 2006 a police constable at Hounslow Borough was found guilty of a criminal offence. The officer was sentenced on 28 March 2006 and on advice from Directorate of Professional Standards (DPS) he was removed from pay. The officer immediately appealed his conviction, was granted bail and on advice from DPS on 31 March 2006 the officer was returned to pay. However, the appeal failed and at a misconduct hearing the officer was dismissed from service on 3 April 2006. Neither Hounslow Borough nor DPS notified payroll nor was the officer’s HR record changed to reflect the dismissal and the officer remained on the payroll until Hounslow Borough notified payroll on 20 June 2007 resulting in an overpayment of salary of £27,064.86.

7. The case was referred to the Crown Prosecution Service (CPS) by the DPS. The CPS considered that there was evidence of fraudulent behaviour but decided not to proceed to prosecution and recommended civil action. The MPS proceeded with a County Court Judgement application. Judgement was in favour of the MPS but recovery could not be pursued because of a lack of identifiable assets against which the MPS could cost effectively enforce. Warrants against possessions were issued but could not be applied as there were no assets which could be identified as belonging to the individual concerned.
Additionally, legal advice has been sought from external solicitors. See Section C Legal Implications. A bankruptcy petition was not pursued as it was considered to be a costly and ineffective remedy. A charging restriction was considered but not pursued as it was considered that such action would not be cost effective.

In accordance with all cases of Police Officer dismissal from service, the MPA applied for a certificate of forfeiture (on the officer’s pension) but particularly highlighted the overpayment circumstances which the Home Office declined because they were not satisfied that the officer’s actions were liable to lead to a serious loss of confidence in the public service. There is no appeal process other than seeking a judicial review again incurring further costs.

8. It is considered no further action is suitable and request the sum of £27,064.86 is written off.

C Other organisational and community implications

Equality and Diversity Impact

There are no equality or diversity implications associated with this report.

Consideration of MET Forward

Making use of expert services within the workforce all attempts have been made to recover the outstanding debt and salary overpayment set out in this report. To conclude that no further action is possible supports the purpose of MET Forward to provide value for money versus spending further for little or no recovery. There should also be public confidence that the MPS will pursue sums it is owed by using all available means.

Financial Implications

The financial implications of this report are that:
The sum of £33,597.95 will be written off against the Metropolitan Police Service’s Provision for Bad Debt. This amount has been provided for in the 2010/11 bad debt provision of £0.327m.
The sum of £27,064.86 will be written off against 2010/11 revenue budget.

Legal Implications

1. In relation to paragraph 7 of Section B, external legal advice was obtained in 2008 which indicates that the options were to proceed to obtain a charging order against the officer’s share of a property held in the joint names of the officer and his wife, (total value of the property some £95k) or to apply for a bankruptcy petition. A charge entitles the MPS to be notified of any sale so as to seek enforcement against any equity held by the officer at the time of sale. The husband and wife’s respective shares was not known. In 2008 another creditor held a charge to an unknown value in relation to the officers’ share of the property. There was also a mortgage on the property to an unknown value.

2. The external legal advice considered that, with the uncertainty in relation to the officer’s equity in the property, the cost of bankruptcy proceedings or of obtaining and enforcing a charging restriction might be considered prohibitive. The MPS did not make an application for a charging restriction for the reasons set out at para. 7 of this report, which also contains the reasons in support of the application to write-off the debt.

Environmental Implications

None.

Risk Implications

None

D. Background papers

None

E. Contact details

Report authors: Paul Daly, Director of Exchequer Services, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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