Council breaching revenue rules over VAT on fuel, report reveals

Craven Council breached Revenue and Customs rules and a councillor was paid expenses despite an out-of-date driving licence on file, a report has revealed.

Reimbursment was made for 1,600 miles after the councillor’s driving licence expired, according to the Internal Audit Review of Members’ Expenses.

“It may be that the councillor has an up-to -date driving license now, but this information has yet to be submitted to the council,” said the report, which will be presented to Craven Council’s Audit and Governance Committee today.

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One councillor claimed for mileage during a period not covered by the insurance policy and a third claimed and received reimbursement for mileage travelled while on official council business – despite having inadequate annual business insurance cover.

The report found that Craven Council is “currently breaching HMRC’s rules relating to the VAT treatment of fuel when used in private vehicles”.

And it revealed four councillors have claimed and received reimbursement for mileage undertaken but have failed to submit details of the driving licences or business insurance when requested by the finance team as part of their annual procedures.

The audit awarded a “partial” level of assurance, meaning that “weaknesses are identified in the design or inconsistent application of controls, which put the achievement of some of the council’s corporate and service objectives at risk in the areas reviewed”. It unearthed a catalogue of weaknesses including: “a lack of clarity over which mileage rates should be used to reimburse members” and inconsistency between different meal subsistence rates allowable for officers and councillors.

Auditors found the council may be reimbursing mileage claims for unapproved visits and uncovered several instances where payments made have breached its own policy.

Last year, £15.50 was reimbursed to one councillor for payment of three bottles of beer – despite policy prohibiting claims for alcoholic drinks. “This should never have been part of an expense claim but should also have been identified at the claim verification stage and rejected,” the report said. The councillor must now reimburse the local authority.

The report did show, however, that no councillor has submitted a fraudulent mileage or subsistence claim for a meeting they did not attend.

A Craven District Council spokeswoman said: “The report presents the findings of the council’s Internal Audit service following their review of the council’s procedures for the payment of member allowances and expenses.

“This review was undertaken as part of the planned programme of reviews of the council’s services by the internal audit team. The purpose of the report is to highlight any potential risks to the council’s procedures and finances and suggest improvements, this is the case with all such reviews by internal audit.

“The report contains a number of recommendations for improvement which the council will implement.”

One councillor must repay £23.42 to the council after an apparent blunder. The report reveals that on one mileage claim, the member requested reimbursement of a £44.22 train fare. But on checking the attached receipt, the auditor found the claimant had added together the cost of the fare (£20.80) to the time of the return train (23:42).

The review of members’ expenses covers mileage and subsistence claims reimbursed between April 1 2013 and November 30 2013. During that period £6,252 was reimbursed to 12 councillors.

This compares to £6,422 paid to 16 councillors for the whole of 2012/13.