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Accountant's Information Bulletin - Issue 7

AiB Newsletter Issue  7

Welcome

Welcome to the Seventh edition of our Newsletter. Please take time to read the Newsletter and to bring it to the attention of relevant individuals within your organisation.

We would appreciate your feedback so that we may gauge the Newsletter's effectiveness and incorporate improvements in future editions. If there are specific subjects that you would like us to cover, then please let us know.

We hope that the guidance provided will prove to be a valuable reference tool.

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Trustee agent news banner

Visits to Accountant in Bankruptcy

Our Newsletter published in August 2008 advised that we would be happy to arrange visits to the AiB for Trustees, Agents and their staff, to obtain an overview of AiB procedures.

Feedback received from participants following previous visits has been very positive. The general opinion being that the visits have been mutually beneficial and should result in an improved working relationship therefore, the time and resource saving should benefit all.

If you are interested in arranging a visit to our office, or alternatively you would like us to visit your offices, please contact us.


AGENT TIP

In agency cases, it is not necessary to submit bank statements along with the account for audit. Please only submit the required supporting documents i.e. invoices, state for settlement etc.


Agent and Trustee Supervision

Income Payment Agreement (IPA)

An IPA is for a period of up to 3 years although the debtor is discharged after 1 year. Any change to the IPA should be agreed in writing by the Agent/Trustee and the debtor and a copy forwarded to AiB. If an IPA has ceased, but the debtor is in a position to resume payment of the contribution after the date of their discharge, a written agreement should be obtained, a new IPA is not appropriate. AiB Supervision Team should be advised of the reason for the cessation of the IPA and whether or not a Section 32 application is to be made to the sheriff for an Income Payment Order (IPO). In some cases we have received final accounts showing only one or two contributions having been paid, yet no details of the IPA are held, nor have any details of the early termination been received.

The Bankruptcy (Scotland) Act 1985 (as amended), Section 32 (4K), states that the IPA agreement should be sent to AiB. However, we do not receive many IPAs. Please ensure in future that all IPAs are sent to the AiB Supervision Team.


TRUSTEE TIP

It would be helpful if accounts are clearly marked for 'The Accounts Team' when they are being submitted to the Accountant in Bankruptcy. This would help our Mail Team easily distribute the mail to the correct team. If contact details of the person dealing with the account are included, this assists in resolving queries.


Case Reviews

Please note that our Supervision Team will shortly commence a review of all pre- 2000 agency cases in order to progress towards closure. To ensure that an informed decision can be made, you may be asked to complete a review form and your co-operation and assistance will be appreciated.

If you have any queries regarding the above please contact us.

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Agents news banner

Statement of Transactions

An electronic workbook has been developed which automatically calculates fees due to Agents and the Trustee (AiB). The workbook replaces the paper Annex K1 and G and once completed, the document is e-mailed directly to the AiB Accounts Team. Feedback from current users has been very positive. Accounts Team staff will shortly begin to contact Agents and arrange to provide an overview of the advantages of using the workbook, alternatively Agents can contact the Accounts Team for further information.

Trustee news banner


AGENT TIP

Prior to submitting a penultimate account with a Scheme of Division, please ensure that all outlays incurred, via the AiB contracted suppliers, have been invoiced and paid. Provision for all fees and outlays due must be made before funds are distributed.


Trust Deed Protection

To facilitate the registration and protection of Trust Deeds it would be helpful if Trustees would note the following when submitting documents.

A Trust Deed cannot be protected until the 5 week Edinburgh Gazette publication period has passed. We are still receiving Trust Deeds before the end of this period, which we are required to return. Please ensure that you do not forward Trust Deeds to AiB until the correct time.

Please ensure that all information entered on the Form 3 is correct, as errors may not be identified until later and the correction action can be time consuming for Trustees' staff and AiB.

All documents are scanned onto our computer system when received. Therefore, to assist in ensuring that all documents can be effectively scanned, we would be grateful if:

  • Black ink is used at all times and handwriting is legible. This helps to ensure we get a good scanned image.
  • Staples, sticky notes and page indicators are not used unless really necessary. This will reduce the time we are required to spend preparing items for scanning.

Your assistance in this would be much appreciated.

If you have any queries regarding the above please contact us.

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Guest article

Finance Team

Returned Cheques

There has recently been an increase in the number of cheques returned to AiB unpaid from the bank, often because the payer account has been closed. Please ensure that all cheques have been cashed before closing bank accounts, particularly when sending in consigned funds. Another common reason is that cheques have not been signed in accordance with the bank mandate, therefore please ensure that all signatures match the bank mandate and that two signatures are provided where required. This will avoid additional work for parties involved in the return and re-submission of cheques.

If you have any queries regarding the above please contact us.


AGENT/TRUSTEE TIP

Any issues or queries not relating to Accounts should be submitted separately to our Correspondence Team. This should prevent possible delays in providing our responses.


Bankruptcy Restrictions Team

First Bankruptcy Restrictions Order (BRO) granted in Scotland

Bankruptcy restrictions were introduced by legislation on 1 April 2008. The grounds for an Order are described in Section 56B of the Bankruptcy (Scotland) Act 1985, as amended (The Act). Restrictions can be imposed by the Accountant in Bankruptcy or a Sheriff, where there is evidence that the debtor has been dishonest or blameworthy, either before or during their bankruptcy. The restrictions can apply for between 2 and 15 years dependent on the severity of the misbehaviour.

On the 11 January 2010 the Sheriff at Falkirk Sheriff Court, having considered the application and evidence from AiB, granted an application for a Bankruptcy Restriction Order for a period of 8 years in respect of the debtor Zahid Ali, 70 Wallace Brae Drive, Falkirk FK2 0FB, trading as Centre News Ltd, 4 Vicar Street, Falkirk FK1 1JL. The misconduct was in terms of the grounds stated in section 56(B)(2)(a), (b), (l) and (m) of the Act. The debtor initially failed to co-operate with his Trustee by deliberately swapping identities with his brother; failed to produce business records and accounts when requested to do so by his Trustee and fraudulently concealed assets from his Trustee by failing to declare business premises which he operated.

If a debtor acknowledges that their conduct was inappropriate they can agree a Bankruptcy Restrictions Undertaking (BRU) with AiB. The same restrictions apply but the process does not involve going to Court.

Since 1 April 2008 the AiB have accepted a total of eight BRUs from debtors, two recent examples are: --

1. S56(B)(2)(k) - Extravagance

Two weeks before making an application for bankruptcy a debtor, knowing that she had debts totalling £42,853.63, took a holiday to Crete costing £1,645.34 using her Barclaycard credit card. We accepted a BRU from her for a period of 2 years.

2. S56(B)(2)(g) - Gratuitous Alienation

The debtor, shortly before making application for bankruptcy, "sold" his car which had been valued at £3,500 to his wife for little or no consideration. We accepted a BRU from him for a period of 2 years.

Should you consider that the conduct of any debtors has been inappropriate under the terms of s 56(B)(2) of the Act and wish any assistance or advice about submitting an application for investigation to the Bankruptcy Restrictions & Correspondence Team (BRCT) at AiB, please contact us.


TRUSTEE TIP

If provision is made in a Scheme of Division for a fee to close and is over £1000, a SIP9 should be submitted. If unable to supply a SIP9, because the hours have been estimated, please provide details of how your fee has been calculated, i.e. 1 x hour cashier, 2 x hour admin etc.


AGENT TIP

Agents are advised that, from 1 January 2010, fees will attract VAT at the rate of 17.5%. The Accounts Team should be notified when an Agent de-registers for VAT.


Supervision and Monitoring Team

Protected Trust Deed Notes for Guidance (for PTDs signed on or after 1 April 2008)

The AiB's Notes for Guidance for Protected Trust Deeds will be reviewed shortly to clarify AiB's supervisory duty and ensure consistency with the revised SIP3A issued 7 December 2009.

In the meantime can we remind you of the following;

  • The supervision fee will normally be invoiced at the end of the first year and the second year, however if the PTD finishes early, the full outstanding amount will be invoiced.
  • Accounts submitted with the Form 4 should be annual accounts reflecting the information provided in the Form 4.
  • Form 4s and accounts submitted unsigned will be returned. Although we accept accounts signed on the Trustee's behalf it is the Trustee's responsibility to ensure the member of staff is authorised to sign documents on their behalf.
  • Trustees seeking discharge from a Trust Deed signed after the 01/04/08 should submit the following:
    - signed Form 7,
    - signed account to reflect figures provided in the Form 7
    - either a Form 5 (debtor discharge), or, a copy of the letter sent to the debtor advising them of the reason they are not being discharged from their debts, Regulation 23 (2)(a), their right of appeal applies.

The PTD Supervision Team will accept signed Form 4s and accounts by email to the following mailbox: aibptdform4&account@aib.gsi.gov.uk

If there is anything you wish to discuss regarding PTDs or the information above, please feel free to contact us.

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We hope our February edition of the newsletter has been both informative and useful to you.

Remember, if you would like anyone else from your organisation to be included in our mailing list please let us know. We would also greatly welcome feedback and ideas for future topics. You can do both by clicking the AiB link on the right.

Look out for our Newsletter next quarter!

Best Wishes

AiB Accounts Team

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The Accountant's Newsletter is produced by the Accounts Team, and Case Operations Branch at AiB, for the benefit of Trustees and Agents working with the Agency. All information presented here was true and accurate at the time of publication.