Register of Insolvencies
The register of insolvencies is a statutory register about the insolvency of individuals and businesses in Scotland.
Accountant's Information Bulletin
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TRUSTEE TIP
Please note that supporting documents to verify income and outlays must be submitted with the account to enable AiB to approve and determine your outlays. Internal vouchers for outlays are not acceptable as verification, copy invoices etc are required. If you pay someone for a service then a copy invoice should be available.
TRUSTEE TIP
Please ensure that all income and expenditure is shown through your final receipts and payments before it is submitted to the AiB. Recently we have been receiving finals, after finals have already been submitted and determined. This area of concern was raised in our last newsletter.
AGENT TIP
Please ensure that when sending in an account for audit, all funds ingathered within the accounting period have been remitted, or are enclosed with the account. Any accounts submitted before the funds have been received will be returned unaudited
TRUSTEE TIP
It would be helpful if Trustees would indicate which rate of VAT has been used when showing their fees through their receipts and payments account.
TRUSTEE TIP
When submitting a Final account after a Scheme of Division and the Final fee is higher than was anticipated in the Scheme of Division, an explanation plus a detailed SIP9 must be provided to account for the difference. If this is a substantial difference AiB may request the case files to verify.
AGENT TIP
Please note that outlays paid directly by the Agent should not be deducted from funds ingathered, they should be claimed through the account in the normal manner.
TRUSTEE TIP
Please note a State for Settlement must be provided when heritage has been realised during the account period. The auditor uses this document to consider which outlays attract an audit fee, therefore, a Scheme of Division/Final account will not be completed if the State for Settlement has not been received.Accountant's Information Bulletin - Issue 10
Sederunt Books
Decisions on realisation of heritage
Before requesting a legal service or a decision from this office with regards to the realisation of heritage, would Agents please ensure that this office holds a copy of the property search, a recent valuation and current redemption figure from the secured lender and any other pertinent information, for example, whether the property is jointly owned or section 40 consent has been obtained. This will allow an informed decision to be made without seeking further information.
Chartered surveyor and sheriff officers services
In Septemeber 2010 the Surveyor/Sheriff Officers contract was established. AiB are invoiced direct for these services, therefore, if an Agent receives an invoice for a service from any of the companies listed below, it should be returned unpaid, and not included in the Annex G or K1.
Surveyors:
SSH, DM Hall; J&E Shepherd; Whyte & Barrie and Graham & Sibbald.
Sheriff Officers:
Stirling Park; and Scott & Co.
Distribution to creditors
Please note that distribution to creditors should not be undertaken until the eight week appeal period has expired, Section 53(6) of the Bankruptcy (Scotland) Act 1985 (as amended) refers. Or, if an appeal is made, on the final determination of the last such appeal, Section 53(7) of the Bankruptcy (Scotland) Act 1985 (as amended) refers.
If you have any queries regarding the above, please contact us.
Large Claims
If AiB has requested timesheets when auditing an account, please ensure that an explanation/description/narrative of the work undertaken is included. The auditor cannot allow for time claimed if he/she cannot confidently agree that the work has been reasonably undertaken.
If submitting your correspondence files with your timesheets, there should be evidence in your files to correspond with these i.e. file notes for telephone conversations, meetings, etc. The auditor cannot allow for time which is not evidenced as they would be unable to justify to the court why the time was allowed, if an appeal was received.
Scheme of Division
Where a Scheme of Division has been approved, dividend payments should be forwarded to the creditors following expiry of the appeal period. If the trustee disagrees with amendments made by the auditor they should immediately contact the auditor in order to resolve. There have been instances recently where the amount approved as available for a dividend to creditors or a reversion to the debtor has not been paid and the trustee has paid a different amount, this is not acceptable. When the final account is submitted and the amount paid to creditors or the debtor is not the amount approved, your final account will not be determined until the matter is resolved.
Please ensure that a Schedule of Creditors claims detailing the accepted claim and the expected dividend payable, is submitted with your Scheme of Division together with a breakdown/sip9 for the provision of the fee to close.
E-mailing Accounts team
It has been noted some trustees/agents are sending queries/accounts directly to individuals within the team. When a member of staff is unexpectedly absent their e-mail account might not be monitored and in addition leads to an unfair distribution of work. Therefore, please ensure that all correspondence is sent to the relevant mailboxes listed below as they are actioned on a regular basis.
AIBAgentsaccounts@aib.gsi.gov.uk
AiBTrusteeaccounts@aib.gsi.gov.uk
Protected Trust Deed (PTD) Forms
Trustees are reminded that 3rd year Form 4s are expected for each case where a Form 7 is not ready to be submitted on the anniversary of the signing date.
The PTD Supervision Team will only accept a Form 5 or a Form 7 if they are signed by a trustee. This is to ensure the Trustee is aware of the information that will be updated on the Register of Insolvencies. AiB will accept Form 4s and Receipts and Payments signed on behalf of the trustee, however it is the trustee’s responsibility to ensure the member of staff is authorised to sign documents on their behalf.
PTD Supervision team will accept signed documents by e-mail, if sent to the following mailboxes:
Trustee’s Discharge
If a Debtor has been sequestrated following their Protected Trust Deed, the Trustee still has to seek their discharge from the creditors, regardless of whether a distribution is being made. Following the creditors’ consent to the Trustee’s discharge, a Form 7 must be submitted to AiB stating the discharge date granted by the creditors.
If a distribution is not being made, the Form 6 can be amended by deleting Bullet Point 2.
If you have any queries regarding the above, please contact us.
Bankruptcy Restrictions
During 2010/2011, the Accountant in Bankruptcy (AiB) investigated and obtained 19 Bankruptcy Restriction Undertakings (BRU) and four Bankruptcy Restriction Orders (BRO). A further 34 investigations have been carried forward into the next financial year.
These BRUs and BROs have been obtained as a result of robust investigations of the submissions received from AiB staff, our Agents, providers and a private Trustee. Last year the Bankruptcy Restrictions Team (BRT) received 47 Bankruptcy Restrictions submissions from AiB in-house teams, 26 from our Agents and Providers but only 1 submission from a private trustee.
The Bankruptcy (Scotland) Act 1985, as amended, (the Act) allows only AiB to make a BRO application to a Sheriff Court and to agree a BRU. However, Section 3(3A) of the Act makes it the responsibility of all Trustees to report a debtor’s misbehaviour to AiB, if there are grounds to believe the debtor’s behaviour warrants a BRO. All Trustees must consider the debtor’s behaviour prior to, and during, the period of their bankruptcy. Therefore, consideration must be given, by all trustees, as to whether the debtor’s behaviour requires a BRO submission to be made to AiB.
Bankruptcy Restrictions are an invaluable tool in regulating a debtors’ future behaviour and they give a level of protection to creditors and employers from unsuitable debtors.
The BROs and BRUs that we have obtained and agreed have applied restrictions on the debtors that will continue to apply to them after their discharge, for periods of between two and nine years. For very serious cases, restrictions can be imposed for up to 15 years. Details of the debtors’ BROs and BRUs remain on the Register of Insolvencies for the full period of the Restrictions.
If you have any questions regarding Bankruptcy Restrictions, or you would like to discuss a specific case with AiB before deciding whether to make a formal submission to AiB, please contact the Bankruptcy Restrictions team.
Alternatively, a member of the Bankruptcy Restrictions team would be happy to visit your office to give a presentation on Bankruptcy Restrictions to you or your staff, or to discuss specific cases with you directly. Please contact the team if you would like to arrange this.
Certificate for Sequestration
The new Certificate for Sequestration (CFS) route to bankruptcy was introduced on 15 November 2010 to provide debt relief for those debtors who did not meet the Low Income Low Asset (LILA) criteria, and who could not demonstrate that they met the apparent insolvency requirements of Section 7 of The Act.
The numbers of debtors requiring debt relief via this route was initially unclear, but the latest quarterly statistics published by AiB on 19 April 2011 has demonstrated the success of this route into bankruptcy: in the fourth quarter, 555 of the 2173 debtor application awards made were as a result of Certificates for Sequestration. There have been some recurring issues with the applications which hopefully, can be solved by following these steps:
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The most common issue encountered with CFS applications is in relation to the dates on the Certificate. The explanatory notes to Statutory Instrument 2010 No. 397, The Bankruptcy (Certificate for Sequestration) (Scotland) Regulations 2010 advise that the Certificate is valid for 30 days from the date it is signed by the authorising person. Hence, the debtor should not be signing and dating their part of the Certificate, or their debtor application, before the authorising person has signed and issued the Certificate.
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If the debtor application and Certificate are signed by the debtor, before the authorising person’s date, then it cannot be accepted as this renders the application invalid in terms of the Regulations.
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Regulation 5 (3) states that the CFS must be on the headed notepaper of the authorising person. If it is not on headed paper, it is invalid for the purpose of the application.
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If there should be any occasion where an amended CFS needs to be submitted in respect of an application, it should be accompanied by an explanatory cover letter. This ensures the whole facts of the case are available to AiB when the application is being passed for adjudication, and satisfies audit requirements.
While these issues are relatively minor, it causes unnecessary delays in processing, as well as the debtor losing their £100 application fee if the application is then rejected.
If there are any issues regarding the CFS or any matters in relation to the Debtor Application process, please feel free to contact the Debtor Applications team.
We hope our 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 emailing us.
Look out for our next edition of our newsletter!
Best Wishes
AiB Accounts and Supervision Team
