Moray Council failed to declare more than £85,000 of VAT on income received from selling recycled paper.
Incorrect accounting led to the oversight.
No declarations have been made to HM Revenue and Customs since September 2020 on money paid by the paper recycling contractor.
The mistake is expected to incur an interest penalty charge on the council.
An internal audit into the local authority’s domestic waste collection highlighted the issue.
£85k VAT payment
Agreements are in place with external contractors who buy recyclable materials, which generates income for the council.
However the audit found no payments have been made for plastics collected.
Also, there was no contract in place between the authority and the organisation recycling aluminium and steel cans.
In his report audit and risk manager Dafydd Lewis said: “The audit found that no VAT had been declared to HM Revenue and Customs for income received from the recycling of paper since September 2020.
“The council has an agreement with a contractor for the recycling of plastic.
“The audit noted there was an expectation this would generate income for the
council from regular payments made by the contractor for the plastic provided for recycling.
“Unfortunately, the council has received no payment due to quality
issues in plastics submitted.”
The scope of the audit carried out earlier this year, was to review systems and procedures to ensure the most effective and efficient use of resources.
It also reviewed arrangements for disposing of recyclable materials.
No payments for plastic recycling
Recommendations include providing documents for VAT applicable income to the payment section, and formalising an agreement with the contractor dealing with cans.
Also, a review of the plastic recycling arrangements is called for, to see if haulage costs can be reduced and the quality of material improved.
Officers will be reminded to check workers’ time sheets before they are sent to payroll.
A contingency plans should also be agreed to ensure continuous delivery of the service in times of disruption.
The council collects waste and recyclables from around 46,000 households at a cost of £3.1 million a year.
Members of the audit and scrutiny committee will discuss the report on Wednesday.
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