MAIDSTONE BOROUGH COUNCIL

CABINET

19 DECEMBER 2012

REPORT OF HEAD OF FINANCE & CUSTOMER SERVICES

Report prepared by Paul Riley

Head of Finance & Customer Services 

1.           COUNCIL TAX 2013/14 – COLLECTION FUND ADJUSTMENTS

1.1        Issue for Decision

1.1.1   This report details the anticipated balance on the Collection Fund as at 31 March 2013 relating to the collection of local taxation.  The distribution of balances to precepting authorities is an important part of their budget calculation and a decision at this time enables timely advice to those authorities.  It also enables timely consideration in relation to the Council’s own budget strategy.

1.2        Recommendation of the Head of Finance and Customer Services

1.2.1   That Cabinet agree the projection detailed in this report and as a result agree the distribution of the surplus as set out in paragraph 1.3.7 as follows:

1.3        Reasons for Recommendation

1.3.1   Members will be aware that this Council is required to maintain a Collection Fund which accounts for all local tax payments.  The income into the Fund is used to pay the precepts to Kent County Council, Kent Police Authority, Kent Fire Authority and the equivalent requirement of this Council (which includes Parish Precepts).

1.3.2   For the proper maintenance of the Collection Fund it is necessary to assess, on an annual basis, the likely balance on the Collection Fund as at 31 March of each year.  Any balance, either positive or negative, must be taken into account in the following financial year.  However, the balance on the fund, under the statutory conditions relating to Council Tax, does not become a credit or charge on this Council solely but needs to be split proportionately between Kent County Council, Kent Police Authority, Kent Fire and Rescue Authority and this Authority on the basis of the demand or precept in the current financial year.

1.3.3   The current situation regarding Council Tax in 2012/13 is projected to 31^st March 2013 in APPENDIX A.  This Appendix details the precepts and demands on the Fund.  These total £91,178,935.

1.3.4   APPENDIX A also details the latest situation regarding Council Tax bills dispatched, incorporating exemptions and discounts.  Total income is now anticipated to be £91,224,430; therefore a surplus of £45,495 is anticipated for 2012/13.  The Collection Fund has produced this surplus due to the continuing increase in properties on the valuation list although this is at a reducing rate reflecting the current economic climate.  The impact of this is reflected in the tax base report considered by General Purposes Committee on 19 December 2012.  The projection also includes an allowance for properties that will come on to the valuation list up to March 2013.

1.3.5   The actual Council Tax surplus, as at 31 March 2012, was £153,465.  The predicted outturn at this time last year was less than £1,000 and a value of zero was taken into account in setting the Council Tax in 2012/13.  Therefore, there is a balance of £153,465 resulting from the under distribution in this year.  This balance must be distributed during 2013/14.

1.3.6   In total, APPENDIX A estimates that there will be a net surplus on the Collection Fund for 2012/13 of £198,960.

1.3.7   In line with the Local Government Finance Act 1992 it is necessary to declare the distribution of any surplus or deficit on the Collection Fund and for this reason it is recommended that the surplus be distributed in line with the table below which apportions the surplus in line with the preceptors share of the Council Tax as set out in Appendix A.

1.4        Alternative Action and why not Recommended

1.4.1   It is a statutory requirement that any adjustment be calculated annually and Cabinet could not choose to ignore this decision.

1.4.2   Cabinet could vary the figures used in the estimate provided at APPENDIX A however they are based on data from the Council Tax system and projections developed from past experience and known factors.  They represent a reasonable estimate of the situation.

1.4.3   Should Cabinet chose to vary the data and distribute a different surplus or deficit this would affect the balance on the Collection Fund and the cash flow of the Council.

1.5        Impact on Corporate Objectives

1.5.1   The results of this decision affects the overall budget strategy process and therefore the pressure on Council Tax in creating a balanced budget.

1.6        Risk Management

1.6.1   The calculation of the balance on the Collection Fund at 31 March 2013 could be incorrect and a significant deficit could arise.  This would be recouped from the various preceptors and the Council in 2014/15.  In the period between, the deficit would affect the Council’s cash flow.

1.6.2   Monthly monitoring of collection rates and the growth seen in the tax base over recent years all enable the Council to mitigate this risk.

1.7        Other Implications

1.7.1    

1.7.2   The distribution of the surplus will mean that the 2013/14 budget will benefit from the receipt of this Council’s £32,033 share of the surplus. 

1.8        Relevant Documents

1.8.1   Appendices

Appendix A – Collection Fund projection to 31 March 2013.

IS THIS A KEY DECISION REPORT? X     Yes                                               No     If yes, when did it first appear in the Forward Plan?   …………………………………………………………………………………………………………………………..     This is a Key Decision because: ………………………………………………………………………..   …………………………………………………………………………………………………………………………….       Wards/Parishes affected: …………………………………………………………………………………..   ……………………………………………………………………………………………………………………………..