DISSF(12-13)02

The Bankruptcy Fees etc.(Scotland) Regulations 2012

Since 2006-07, Accountant in Bankruptcy (AiB) has been working to reduce funding from the Scottish Government by moving towards the delivery of full cost recovery. A fees system which reflects the costs of delivering our services will allow the Agency to reduce its reliance on funding from the public purse.

The Bankruptcy Fees etc. (Scotland) Regulations 2012 introduces changes to AiB’s current fees structure and sets out the fees involved in administering personal insolvencies in Scotland in accordance with AiB’s functions.

Debtor application fees will increase in order to more accurately reflect the rising unit cost of processing an application however this new fee will still remain significantly lower than current rates charged in England, Wales and Northern Ireland. The changes will also result in the reduction of some fees charged by AiB, such as the creditor petition administration fee, which will go down from £200 to £100.

While the majority of our fees will remain unchanged in 2012-13, the Regulations contain some changes to fee rates and the ways in which fees are charged. The regulations will come into effect in part on 1 June 2012 and in full on 1 July 2012.

AiB is committed to ensuring transparency in introducing these changes and full details of thesefeescan be viewed online-
The Bankruptcy Fees etc.(Scotland) Regulation s 2012 (draft)

Making Efficiencies
AiB’s Annual Report and Accounts for 2011-12, to published later this year, is expected to report a continued trend of lowering operating expenditure in real terms due to our focus on cost reductions and efficiencies since 2006.

The volume of new bankruptcy cases, where AiB was trustee, approximately doubled between 2006-07 and 2010-11 and this, coupled with a decline in expenditure in real terms (as shown in table above) demonstrates AiB’s commitment to ensuring efficiencies.

Debtor applications
This fee is to cover the cost of the process involved in determining an award of bankruptcy applied for through a debtor application. The cost of a debtor application has remained at £100 since 2008 despite the unit cost increasing over recent years due to a decline in the number of applications. This has resulted in the fee only partly covering the cost of the work carried out. The debtor application fee will increase from £100 to £200 from 1 June 2012 and is necessary to recover the cost of the process.

The new fee rate for determining a debtor application will remain significantly lower than fees for the same service elsewhere in the UK:

Debtor application fees / Court fee / Debtor fee / total
Scotland / n/a / £200 / £200
EnglandWales* / £175 / £525 / £700
Northern Ireland* / £115 / £525 / £640

*The above fees for EnglandWales and Northern Ireland were correct as of 1 April 2012.

Creditor petitions
From the 1 July 2012 the fees associated with making a petition for sequestration are being replaced with an new fee mechanism. Previously a petitioner would pay a court fee of £95 and a petition administration fee to the Accountant in Bankruptcy of £200. To reflect lower costs incurred in relation to the administration of petitions, Accountant in Bankruptcy is reducing the petition administration fee to £100.

In addition AiB will be charge a deposit of £200 where a sequestration is awarded from a petition and The Accountant in Bankruptcy is appointed as trustee. The fees and the deposit will be recoverable if funds are available in the debtor’s estate when the sequestration ends. Where no funds are available, the £200 will be set against the cost of administration and will help reduce the burden on the public purse.

The new fee mechanism for creditor petitions illustrates that AiB’s fees remain significantly lower that elsewhere in the UK:

Creditor petition fees / Court fee / Petition Admin / Deposit / Total
Scotland (AiB as trustee) / £95 / £100 / £200 / £395
Scotland (IP as trustee) / £95 / £100 / n/a / £195
EnglandWales* / £220 / n/a / £700 / £920
Northern Ireland* / £150 / n/a / £700 / £850

*The above fees for EnglandWales and Northern Ireland were correct as of 1 April 2012.

Supervision on trustees in protected trust deeds
From 1 July 2012, a new charging mechanism for the supervision of a trustee in a protected trust deed (PTD) will be introduced. The previous one-off fee of £250 will be removed and instead AiB will charge £100 for ever year the PTD is supervised. The fee will fall due on the date the trust deed gains protection and every anniversary of that date while the trustee remains in office. If the trustee is discharged from office and the debtor is not discharged from their obligations, then the fee will be refunded for that year. AiB intend to continue the practice of only invoicing the fee one year after the trust deed becomes protected to allow trustees sufficient time to ingather funds.