Three more successful Local Government Reorganisations advised by PSTAX

PSTAX has successfully advised all the councils involved in the three recent government reorganisations. The new unitary councils for Somerset, North Yorkshire, and Cumbria began operating on Saturday 1st April 2023, following the local government reorganisation (LGR) that replaced county and district councils in the two-tier areas with one single tier.

Advised and supported by PSTAX for all taxation implications generated by the merger, the successful reform into the new unitary councils has been described as “the biggest shake-up of councils in 50 years”.

Local Government Reorganisations

Structural changes to local government in England have been taking place since 2019, and to date, nine new unitary councils have been created. All nine new councils were advised on the process by PSTAX, receiving technical taxation support, designed exclusively to allow the transition to the new organisation to be achieved in a safe and legal way.

In July 2021, local government minister Robert Jenrick approved Somerset, North Yorkshire and Cumbria’s individual plans for a single unitary authority. Supported by PSTAX, all three have successfully restructured. Cumbria from a county council and six districts to two new unitary councils. Somerset merged its four councils into one, and North Yorkshire has joined eight councils to form the largest unitary council geographically, in England.

County councils are responsible for functions such as transport, social care, and education, whilst district councils manage housing, planning and waste collection. The reorganisation sees them merge to form new unitary authorities, responsible for all council functions within the area. Savings are expected to come from the reduction of duplication as well as working on a larger scale for procurement and fleet management. A unitary authority will amalgamate services, delivering them with a consistent approach that was formerly split across multiple councils.

A further eight areas have been proposed for unitarisation, including Essex, Lincolnshire, Lancashire, and Gloucestershire.

Supporting Councils through Local Government Reorganisations

PSTAX has supported each council involved in the last four rounds of LGR, from 2019 to present. New unitary councils PSTAX has also advised include Dorset, Buckinghamshire, and Northamptonshire councils.

The expert tax team at PSTAX has gained unique experience handling the numerous technical taxation issues the LGR process generates and has developed an unrivalled understanding of the practical challenges facing council officers involved.

“We called PSTAX because of their reputation”, commented a finance director from one of the new unitary councils. “They were known as being solidly reliable and responsive, and we needed flexibility. PSTAX helped us to be agile and resolve issues fast”.

Preparing for the Vesting Day deadlines, PSTAX has helped councils transition to the new organisation in a safe and legal way. This includes accounting for a range of obligations, such as:

  • Taxation liabilities
  • VAT registration and requirements
  • Digitisation,
  • Employment taxes
  • Payroll merger
  • National insurance
  • Construction Industry Scheme

LGR and HMRC compliance

Working closely with HMRC is a critical part of achieving a safe and legal taxation transition during a local government reform. PSTAX has developed an effective working partnership with HMRC officers to such an extent that the PSTAX team was asked by HMRC to help create best practice guidance for its officers who deal with LGR.

Taxation advisor to the largest number of UK public bodies (over 300), the majority of which are local authorities, PSTAX’s support has been instrumental in helping councils to successfully navigate the complex challenges of Local Government Reorganisations.

The firm’s expert team of tax advisors is committed to providing councils with the support they need to make the transition to a new unitary authority as smooth as possible.

If you are a council facing an LGR or would like to learn more about PSTAX’s taxation services:

Contact us for a free initial meeting

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Nick Burrows

Written by Nick Burrows

Nick has nearly 30 years of working with and supporting public sector bodies with VAT and indirect taxes, starting at HM Customs and Excise and then as in-house VAT Officer at Hampshire County Council. Since moving to advisory firms, Nick has had senior public sector VAT roles at RSM Tenon (now RSM), KPMG, and PSTAX (since 2014). He has led VAT advice nationally on a wide range of public sector issues and helped shape HMRC policy in several key areas.

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