Moray Council will not have to pay a penalty for failing to declare more than £85,000 of VAT.
The bill came from income received from selling recycled paper.
An internal audit into the local authority’s domestic waste collection highlighted the issue.
Incorrect accounting resulted in the oversight.
£85k VAT bill
Members of the audit and scrutiny committee were told this week that HM Revenue and Customs were not imposing a penalty charge for the omission.
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.
Councillor for Speyside Glenlivet David Gordon said he was “disappointed” no money had been made on recycling plastics.
Head of environmental and commercial services Nicola Moss said the quality of the material was the reason behind it.
As there is so much plastic to sort, staff are unable to separate out the poorer quality items.
Also if more people were employed, the money generated would not be enough to cover that cost.
Quality of material an issue
Mrs Moss said the recycling service had been a “victim of its own success”.
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.
Recommendations include providing documents for VAT applicable income to the payment section, and formalising an agreement with the contractor dealing with cans.
Review of plastic recycling
Also, there will be a review of the plastic recycling arrangements 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 will 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.
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