Notes for Guidance - Bankruptcy (Scotland) Act 2016 (as amended)

The Accountant is obliged to charge a fee for issuing a determination of the trustee’s entitlement to remuneration and the reimbursement of outlays under The Fees Order.

The sum determined is defined in section 133(1) (a) (ii) of the Act as the amount of the outlays and the remuneration payable to the trustee.

Outlays for this purpose are intended to include all sums actually paid out by the trustee from their own or bankruptcy funds.

The following outlays and expenses would not be included in the audit fee calculation:

• bank charges
• trading expenses
• tax on interest
• income tax
• inheritance tax
• capital gains tax
• remuneration and outlays settled by third party e.g. property sold on behalf of a secured creditor
• the Accountant’s statutory fees
• petitioning creditor expenses
• funeral expenses and the expenses in 
• expenses of realisation which have been deducted at source

An expense of realisation is defined as any outlay incurred by the trustee in realising the debtor’s estate, which in the course of normal business practice is deducted from the price payable to him.

For example, outlays directly referable to the sale of heritage, that is, advertising, conveyance, etc. would be off-set against the proceeds of sale.

The cost of legal advice or action to secure authority to sell the heritage would not however be treated as an expense of sale, but as a direct outlay.

This will also include other assets that are realised and the auctioneers/agents fees are deducted directly from the price payable to the trustee.

Trading expenses are defined as any outlays incurred by the trustee in the carrying on of any business by the debtor. Thus, if a trustee (with authority) continues to trade the debtor’s business, only the net profit or loss needs to be recorded in the trustee’s account and claim for remuneration and outlays.

When submitting statutory accounts, trustees must make it clear in the notes to the account when outlays are being set-off against receipts, enclosing the appropriate paperwork to verify this when necessary e.g. states for settlement, auctioneers’ invoices.

See section 12.7.3 for advice on personal liability and rights of relief of interim trustees and trustees in respect of statutory fees due to the Accountant.