Agenda item

Report of the Chief Fire Officer

John Buckley, Chief Fire Officer, presented the report which informs members on the outcome of the recent tax review.

The following points were highlighted and members’ questions responded to:

(a)  Following changes in legislation around taxation of vehicles, the Authority engaged specialist tax consultants, PSTAX, to review the procedures and processes in place and ensure that the Service is compliant with all current employment tax and VAT regulations;

(b)  Some gaps in policy and procedure have been identified, however with regard to vehicle and travel expenses some historic errors around the interpretation of requirements (dating back to 1998) have been found;

(c)  These errors relate to lease cars, essential user lump sums, temporary postings, principal officer cars, and home to base mileage payments;

(d)  Members are assured that by November all gaps and errors identified in policies and procedures will have been addressed and will be fully compliant;

(e)  PSTAX will negotiate with HMRC on behalf of the Authority, and judging by previous results, as the Service instigated the audit of its taxation policies and procedures and has been transparent about the findings, it is hoped that HMRC will not request that the tax due for the last seven years of errors is paid, and will only seek to recover the last four years of tax owed, without penalty. This is yet to be confirmed;

(f)  It is anticipated that if four years back dated liabilities are required to be paid to HMRC, the cost to the Authority will be between £225,000 and £250,000;

(g)  As the fault is that of the Authority and not of the employees concerned, it is not believed to be appropriate nor efficient to try and retrieve the correct tax owed from the affected employees, so the funds will be drawn from the Authority’s reserves.

The Chair of the Finance and Resources Committee, Councillor Malcolm Wood, expressed great disappointment at the situation and the substantial funding required to address it, particularly at a time when funds are precious. Assurance is sought that safeguard systems are embedded in policies and procedures to ensure that no similar errors can occur in future.

Councillor Andrew Brown thanked the Chief Fire Officer for his honesty and requested consideration of a full policy setting review, the results of which should be reported to the Finance and Resources Committee, to assure members that nothing like this can happen again.

Councillor Brian Grocock, Chair of the Authority, noted the concerns of members, the disappointment that this position had arisen, and the actions taken by the Chief Fire Officer to address and prevent future errors. Whilst a thorough review has been undertaken by PSTAX around taxation requirements, and appropriate responses applied where fault has been found, a full review of policy setting is not considered appropriate at this time. However, a more detailed update on the review will be submitted to the Finance and Resources Committee where it will also be accessible to all members of the Authority.

RESOLVED

(1)  to agree that a maximum of £250,000 is made available from reserves to meet the cost of the previous tax liabilities identified within the report;

(2)  for an update on the review to be submitted to the Finance and Resources Committee.