Financial statements – GOV.UK

Departmental financial statements

Statement of Comprehensive Net Expenditure for the period ended 31 March 2021

All activities are continuing in operations. The 2019/20 balances have been restated to reflect the removal of those balances now reported in the HM Land Registry Trust Statement.

The Notes to departmental accounts are an integral part of these accounts.

Statement of Financial Position as at 31 March 2021

The 2019/20 balances have been restated to reflect the removal of those balances now updated as part of HM Land Registry Trust Statement.

The Notes to departmental accounts are an integral part of these accounts.

Simon Hayes
Chief Executive and Chief Land Registrar
7 July 2021

Statement of cash flows for the period ended 31 March 2021

All activities are continuing in operations. The 2019/20 balances have been restated to reflect the removal of those balances now reported in the HM Land Registry Trust Statement.

The Notes to departmental accounts are an integral part of these accounts.

Statement of changes in taxpayers’ equity for the period ended 31 March 2021

All activities are continuing in operations. The 2019/20 balances have been restated to reflect the removal of those balances now reported in the HM Land Registry Trust Statement.

The Notes to departmental accounts are an integral part of these accounts.

Notes to departmental accounts

1. Statement of accounting policies

1.1 Basis of preparation

These financial statements have been prepared in accordance with the Government Financial Reporting Manual (FReM) 2020/21 and comply with the Accounts Direction given by HM Treasury. The accounting policies contained in the FReM follow International Financial Reporting Standards (IFRS), as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy that has been judged to be the most appropriate to the particular circumstances of HM Land Registry for the purposes of giving a true and fair view has been selected. HM Land Registry’s accounting policies have been applied consistently in dealing with items considered material in relation to the financial statements.

On 1 April 2020, HM Land Registry transitioned from a trading fund to a non-ministerial department. As a trading fund, HM Land Registry was funded through income, with any surplus returned to HM Treasury as a dividend. As a non-ministerial department, HM Land Registry has its annual expenditure control totals delegated directly by HM Treasury (HMT) and surrenders the fees and charges it collects to the Consolidated Fund.

These financial statements have been prepared on a going concern basis. Management is of the opinion that a going concern basis is appropriate as we are legally obliged under the Land Registration Act 2002 to provide statutory services relating to land registration and there are sufficient reserves to support the organisation going forward. Furthermore, in common with other government departments, the future financing of the department’s liabilities is to be met by future grants of supply and the application of future income, both to be approved annually by Parliament.

Accounting standards issued but not yet effective

IFRS 16 Leases came into effect on 1 January 2019 and replaced IAS 17 Leases. However, HMT recommended that government departments defer the adoption of this accounting standard until 1 April 2022 although some departments were permitted early adoption in limited circumstances. HM Land Registry has elected to adopt this standard from 1 April 2021, and this is covered in more detail in note 1.18.

The change from 1 April 2021 using the retrospective approach is expected to affect three property operating leases and one property held on a non-commercial basis within government. The capitalised values of these right to use assets have been calculated using an existing lease rate of 1.99% (HM Treasury PES 2020 12 issued December 2020) which together have a right to use capital value of £4.2 million. Since HM Land Registry will create right to use assets, and corresponding lease liabilities, net assets are not expected to change significantly. No extra capital funding will be required, and instead of being charged rent the payments falling due will be a reduction in the right to use liability and finance interest expense, together with amortised depreciation of the right to use asset values. An initial cost will be recognised as a retrospective re-statement for 2020/21.

IFRS 16 permits a lessee to exclude assets and liabilities attached to leases with terms of less than 12 months. HM Land Registry currently has one lease with a term of less than 12 months.

IFRS 17 Insurance Contracts will become effective from 1 January 2023 for public sector organisations. This reporting standard is anticipated to have no accounting impact upon HM Land Registry as no such insurance contracts are held.

1.2 Accounting convention

The financial statements have been prepared on an accruals basis under the historical cost convention modified for the revaluation of property, plant and equipment, investment properties, assets held for sale and intangible assets to fair value as determined by the relevant accounting standard.

1.3 Areas of significant estimate and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The estimates and judgements that had a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the current year are:

Note 9: the valuation and useful economic life of the intangible assets. The valuation is the direct replacement cost of the register and the data that is currently in use. The replacement cost includes all costs that are reliably measured and the economic life is reviewed each financial year to determine whether events and circumstances continue to support the life chosen. Intangible assets are also assessed annually for impairment in accordance with IAS 36.

Note 13.2: estimation of the provision required to settle all known and incurred but not reported indemnity claims – where uncertainty exists for the proportion of outstanding claims that will ultimately be paid, the value of those payments and the effect of any legal judgements. For IBNR claims, the number of unreported claims is unknown as is the point at which an error is discovered and the value of any potential claim.

1.4 Income from contracts with customers

IFRS 15 Revenue from Contracts with Customers has been adopted. The income recognition criteria within IFRS 15 are consistent with HM Land Registry accounting policy.

All Statutory fees and charges are held in a separate HM Land Registry Trust Statement. Income in the Statement of Net Expenditure relates to property rental income which is recognised as the amounts fall due.

1.5 Operating segments

HM Land Registry’s operating segments are the directorates which are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The seven reportable business segments are: Chief Executive & Chief Land Registrar’s Office, Human Resources. Finance & Business Services, Operations, Legal, Transformation and Digital, Data & Technology. This is based on the group’s internal organisation and management structure, and is the primary way in which the CODM is provided with financial information. The CODM of HM Land Registry is Simon Hayes, Chief Executive and Chief Land Registrar.

1.6 Employee benefits

The cost of providing employee benefits is recognised in the period in which HM Land Registry receives services from its employees, rather than when it is paid or payable. Short-term employee benefits are recognised as an expense in the period in which the employee renders the service. Performance payments are recognised only when there is a legal or constructive obligation to pay them and the costs can be reliably estimated. Termination benefits are recognised when it can be demonstrated that there is an irreversible agreement to terminate the employment of employee(s) before the schemes’ retirement date or as a result of an offer to encourage voluntary redundancy.

1.7 Pensions

HM Land Registry employees are civil servants who are entitled to be members of the Principal Civil Service Pension Scheme (PCSPS) or the Civil Servant and Other Pension Scheme (CSOPS) – known as ‘Alpha’. These are unfunded multi-employer defined benefit schemes, but HM Land Registry is unable to identify its share of the underlying assets and liabilities on a reasonable and consistent basis. HM Land Registry has therefore accounted for contributions and payments to these schemes under International Accounting Standard (IAS) 19 Employee Benefits as if they were defined contribution schemes. Liability for the payment of future benefits is a charge on the PCSPS or Alpha scheme.

1.8 Property, plant and equipment

Freehold and leasehold land and buildings are professionally valued by external, independent property valuers having appropriate recognised professional qualifications and recent experience in the location and category of the properties being valued. Montagu Evans (Royal Institution of Chartered Surveyors (RICS) registered valuer) carried out a desktop valuation in March 2021 to facilitate the transfer of assets to the Government Property Agency (see Note 19).

HM Land Registry is required by the FReM to disclose non-current assets in the Statement of Financial Position at fair value. For assets in use the FReM requires operational assets to be measured at current value in existing use, rather than market value as required by IAS 16 Property Plant and Equipment. Details of FReM adaptations which continue to apply for 2020/21 can be found on GOV.UK (search ‘Financial Reporting Manual 2020/21’).

For short-life non-property assets, historical cost is used as an approximation to the fair value of the asset. Freehold land and buildings and leasehold buildings are included at revaluation less accumulated depreciation and impairment losses. All other tangible non-current assets are included at historical cost less accumulated depreciation and impairment losses.

Assets in the course of construction are not depreciated. For other assets the depreciation charge is calculated so as to allocate the cost or revalued amount, less the estimated residual value, of non-current assets systematically over their remaining useful lives using the straight-line method.

Other property, plant and equipment includes IT and office equipment and machinery. HM Land Registry capitalises expenditure over £1,000 for an individual asset. Where appropriate, individual assets falling below the minimum value for capitalisation are grouped. It is HM Land Registry’s policy not to capitalise expenditure on fixtures and fittings, principally office furniture, as they are not considered material.

Asset lives are reviewed at the end of each financial year.

The following asset depreciation rates are used:

1.9 Impairment of non-current assets

Impairment reviews are undertaken at each year-end and if there are indications that the asset has suffered an impairment loss a charge is reflected in the Statement of Comprehensive Net Expenditure in the year in which it occurs. If the asset is carried at a revalued amount, the impairment loss is treated as a revaluation decrease, to the extent of the revaluation reserve that relates to the asset, with any excess in the Statement of Comprehensive Net Expenditure. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher of fair value less costs to sell and value in use.

For assets under development, an annual review is undertaken to confirm that these assets still meet the measurement criteria within IAS 38 Intangible Assets.

1.10 Intangible assets

Intangible assets are stated at historical cost less accumulated amortisation and accumulated impairment losses as a proxy for fair value, since no active market exists for the department’s intangible assets. This treatment is also known as Depreciated Replacement Cost.

Software licences

Separately acquired intangible assets are shown at historical cost. The costs incurred to acquire and bring these assets to use are capitalised. These include contractors’ charges, materials, directly attributable labour and directly attributable overhead costs.

Software licences are included at cost less accumulated amortisation. They are amortised on a straight-line basis at a rate of:

Software development costs

In accordance with IAS 38, expenditure incurred on developing new IT infrastructure (covering third-party costs and the direct costs of in-house staff effort) is capitalised. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by HM Land Registry are recognised as intangible assets when the requirements of IAS 38 are met.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditure that does not meet these criteria is recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

All research expenditure is written off as incurred.

Expenditure incurred in software development is recorded as an intangible asset under construction and is then transferred into use as an intangible asset once that software and associated data is made available by HM Land Registry to its customers.

Software development costs are categorised as assets under development within Note 9.

Local Land Charges

HM Land Registry completed the building and development of a computerised register to hold the Local Land Charges data in July 2018. As of 31 March 2021, the data relating to 13 local authorities has been added to the register and is in use.

Under IAS 38, development costs have been capitalised for two separate assets: a database to hold the information; and the data itself, which needs to be cleansed, digitised and migrated to this database. Following commencement of the register service, these components are amortised over their respective useful lives of:

1.11 Investment properties

Investment properties are measured at its fair value. The fair value valuation is its current market value in existing use.

When an investment property is sold or transferred, it is revalued to the recoverable amount and any residual amount held in the Revaluation Reserve is transferred to Retained Earnings (see Note 1.8 for details of the valuer engaged).

All investment properties were included in the asset transfer to the Government Property Agency on 31 March 2021. Further details of this transfer are in Note 19.

1.12 Trade receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for irrecoverable amounts. These impairment provisions are recorded in administrative expenses within the Statement of Comprehensive Net Expenditure.

The carrying amount of trade receivables is deemed to be an approximation of fair value.

If collection of amounts receivable is expected in one year or less they are classified as current assets.

1.13 Cash and cash equivalents

Cash represents cash-in-hand, cash held with the Government Banking Service (GBS) and commercial banks. The commercial bank and GBS deposits are immediately available funds.

1.14 Trade payables

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are stated at their nominal value. The carrying amount of trade payables is deemed to be an approximation of fair value.

1.15 Provisions

HM Land Registry provides for legal and constructive obligations that are of uncertain timing or amount at the Statement of Financial Position date, on the basis of management’s best estimate at that date of the expenditure required to settle the obligation. As the effect of discounting is immaterial, it is included as part of the revaluation to that provision in year, rather than disclosed on a separate line. Provisions are charged to the Statement of Comprehensive Net Expenditure and recorded as liabilities in the Statement of Financial Position. (Further details, including sensitivities, are given in Note 13.)

1.16 Indemnity Fund

Schedule 8 to the Land Registration Act 2002 requires HM Land Registry to indemnify third parties against loss caused by mistakes in the register, mistakes in search results and loss of documents by HM Land Registry. Most of HM Land Registry’s indemnity claims arise as a result of mistakes in the register, and some of these mistakes are the result of forgery of documents such as charges. Indeed fraud/forgery usually accounts for the largest share of indemnity payments, and this year is no exception. Under Schedule 8 to the Act, HM Land Registry has statutory rights to recover these payments from third parties, where it is the case that third parties are at fault, either wholly or partly, for the loss.

As at the current accounting date, future claim payments are uncertain in timing and amount. The Indemnity Fund is established on the basis of the best estimate of the expenditure required to settle the obligation. The Indemnity Fund is determined after considering actuarial estimates of the cost of claims reported but not settled, as well as claims incurred but not reported. The estimated cost of claims includes expenses incurred in settling these claims.

The carrying amount of the Indemnity Fund is derived from critical judgements, estimates and assumptions based upon historical experience and other factors which are considered to be relevant. These estimates and underlying assumptions are reviewed on a quarterly basis by HM Land Registry, supported by its independent actuary, the Government Actuary’s Department (GAD).

After the accounting date, a further review of claims received by HM Land Registry (up to the date the Accounting Officer approves the Annual Report and Accounts) is made to see if the Indemnity Fund is still appropriately valued. Provided in these accounts are the likely settlement values of current and future claims against the Indemnity Fund. Further details of the Indemnity Fund are shown in Note 13.2 of this report.

1.17 Contingent liabilities

Where appropriate, liabilities that have only a possible chance of crystallising and do not meet the provisions criteria have been classified as contingent liabilities. This includes, but is not limited to, claims for losses arising from errors or fraud in relation to HM Land Registry’s statutory responsibility as insurer of titles in England and Wales (see Note 14).

1.18 Finance leases

Where HM Land Registry retains all the risks and rewards of ownership of an asset subject to a lease under IAS 17, the lease is treated as a finance lease. Future instalments payable under finance leases, net of finance charges, are included in liabilities with the corresponding asset values recorded in non-current assets and depreciated over the shorter of their estimated useful lives or their lease terms. Lease payments are apportioned between the finance element, which is charged to the Statement of Comprehensive Net Expenditure as interest, and the capital element, which reduces the outstanding obligation for future instalments.

IFRS 16 will apply to HM Land Registry in 2021/22 IFRS 16 Leases provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less, or the underlying asset meets the IFRS 16 criteria to be classified as of “low value”. The IFRS is effective in the private sector for accounting periods commencing on or after 1 January 2019. HM Land Registry will adopt IFRS 16 in the financial year commencing 1 April 2021.

IFRS 16 gives a narrower definition of a lease than IAS 17 (Leases) and IFRIC 4 (Determining Whether an Arrangement Contains a Lease) by requiring that assets and liabilities will be recognised initially at the discounted value of the minimum lease payments, and that the assets, to be described as “right of use” assets, will be presented under property, plant and equipment. HM Land Registry expects that its existing finance leases will continue to be classified as leases. All existing operating leases will fall within the scope of IFRS 16 under the ‘grandfathering’ rules mandated in the FReM for the initial transition to IFRS 16. Therefore, implementation of IFRS 16 will increase the value of property, plant and equipment assets and the value of lease liabilities.

After initial recognition, right-of-use assets will be amortised on a straight-line basis and interest will be recognised on the liabilities. Except where modified for revaluation where material, the cost model will be applied to assets for leases other than leases with a peppercorn rental, which will be measured on a depreciated replacement cost basis. As a result, the timing of the recognition of the total costs of leasing will change, as interest costs will be higher at the start of a lease.

HMT proposes that IFRS 16 will be implemented using the cumulative catch-up method; as a result, comparatives will not be restated and the measurement of the asset and liability balances recognised with effect from 1 April 2021 will reflect the group’s intentions as at that date. HMT also proposes to issue a central internal rate of borrowing for entities to apply, when they cannot obtain the rate implicit in the lease contract.

As IFRS 16 will be implemented using the cumulative catch-up method, comparatives for 2020/21 will not be re-stated, and the adjustment to net assets will be made with effect from 1 April 2021. For the material arrangements within the scope of IFRS 16, the impact of implementation is currently considered to be an increase in assets and liabilities of approximately £79.17 million.

The right-of-use assets and leasing obligations have been calculated according to the policy described above.

1.19 VAT

HM Land Registry accounts for VAT on its statutory activities under HMT’s Taxing and Contracting Out of Services Directions. For non-statutory activity – which is business activity – VAT is charged and recovered according to commercial VAT rules. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase costs of non-current assets. Where output tax is charged or input tax is recoverable the amounts are stated net of VAT.

1.20 Restatement of 2019/20 results

The results of 2019/20 have been restated to reflect the transfer of Consolidated Fund Extra Receipts to a separate HM Land Registry Trust Statement. The impact of this is detailed in Note 18.

2. Operating segments

2.1 Operating segments

Operating segments are determined in accordance with IFRS 8 Operating Segments based on what information is presented for decision making purposes to the Chief Operating Decision Maker (CODM). The CODM for HM Land Registry is the Accounting Officer.

The structure of HM Land Registry means that materially all of the assets included in the Statement of Financial Position are used for general administration and benefit of HM Land Registry as a whole. Consequently, they are not apportioned to operating segments in the table above.

The description for each operating segment is stated below.

Chief Executive and Chief Land Registrar’s Directorate The directorate works to uphold and enhance the reputation of HM Land Registry on behalf of the Chief Executive and Chief Land Registrar through effective corporate communications, governance, policy and stakeholder functions.

Human Resources

Human Resources works to help HM Land Registry deliver its operational and organisational priorities, and build organisational capacity and capability to meet new challenges.

Finance and Business Services

The Finance and Business Services (FaBS) Directorate includes Facilities Management, Finance, Commercial, Group and Strategic Planning and Performance.

Operations

The Operations Directorate’s main function is to register land and provide a high quality and sustainable level of service to our customers, measured against a set of key performance indicators.

Legal and Assurance

Legal and Assurance works to protect the integrity of the register, ensuring we have the rules, orders, directions and notices in place to operate effectively.

Transformation Directorate

The Transformation Directorate designs and coordinates the transformation activity that takes place across all other directorates.

Digital, Data and Technology

The Digital, Data and Technology (DDaT) Directorate is responsible for: building new digital services; defining and implementing HM Land Registry’s data strategy; developing data products; and managing, maintaining and developing all the technology staff use.

Expenditure streams

The expenditure streams are split into three categories: business as usual (BAU); central costs; and projects. This division is designed to show the costs of running the directorate (BAU), additional tasks being completed by the directorate (projects), and to separate out the central running costs for HM Land Registry (central costs).

Central costs

This category includes items such as staff leave accruals, property costs, depreciation, amortisation, provisions, and impairments which are monitored by a single directorate but could be apportioned across the organisation. Below are explanations relating to the most significant variances arising in the category.

In 2020/21, £52.75 million of central costs in FaBS is attributable to the capital grant-in-kind for the transfer of property to the Government Property Agency (see note 19).

Variance between Note 2. Operating Segments and Statement of Net Comprehensive Expenditure

The operating segments shown above are presented net of revenue (see note 3).

3. Goods and services

3.1 Operating income

3.2 Other costs

In 2019/20, Auditor’s Remuneration was a cash transaction of £80k. Following HM Land Registry’s change in status from a trading fund to a department in 2020/21, the Auditor’s Remuneration became a notional fee of £106k that is paid through the Supply Process.

4. Restructure and reorganisation costs

5. Employee information

5.1 Staff costs

5.2 Staff numbers

The average number of persons employed (full-time equivalent) by HM Land Registry during the year was made up as follows.

5.3 The salary and pension entitlements of the Chief Executive and the directors of HM Land Registry are included in the Remuneration and staff report.

The staff costs in note 5.1 do not include those staff costs capitalised as part of the building of intangible assets. During 2020/21 £5.9m (2019/20: £4.3m) of staff costs was capitalised in the construction of these intangible assets.

5.4 Pensions

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS) – known as “Alpha” – are unfunded multi-employer defined benefit schemes but HM Land Registry is unable to identify its share of the underlying assets and liabilities. The scheme actuary, the Government Actuary’s Department (GAD), valued the PCSPS as at 31 March 2016, with the report published on 26 February 2019.
You can find details in the resource accounts of the Cabinet Office: Civil Superannuation.

For 2020/21, employers’ contributions of £46.8 million were payable to the PCSPS (2019/20 £39.7m) at one of four rates in the range 20.0% to 24.5% of pensionable earnings, based on salary bands.

The Scheme Actuary reviews employer contributions usually every four years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2020/21 to be paid when the member retires and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employers’ contributions of £0.30 million were paid to one appointed stakeholder pension provider. Employer contributions are age-related and ranged from 8% to 14.75%.

Employers also match employee contributions up to 3% of pensionable earnings. In addition, employer contributions of £8,270, 0.5% of pensionable pay, were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service or ill health retirement of these employees.

Contributions due to the partnership pension providers at the balance sheet date were £0.03 million. Contributions prepaid at that date were £0.

Three individuals retired early on ill-health grounds; the total additional accrued pension liabilities in the year amounted to £13,669 (2019/20: £12,480).

Further information relating to pension arrangements can be found in the Remuneration and staff report and Note 1.7.

6. Investment income

7. Finance costs

8. Property, plant and equipment

8.1 Cost or valuation

8.2 Cost or valuation

See Note 1.8 for details of the property, plant and equipment accounting policy.

See Note 1.9 for details of the impairment accounting policy.

See Note 8.3 for details of investment properties.

At the end of the year, the net amount relating to finance leases within the leasehold carrying amount above was £0.0 million, based upon external valuations (2019/20: £0.0 million). However, there remains a finance lease obligation at 31 March 2021 of £4.0 million (see note 15.1).

Assets under construction (AUC): Other has been restated in the prior-year to separate AUC: Other correctly between tangible and intangible assets.

Valuation of land and property

HM Land Registry transferred its freehold and long leasehold properties to Government Property Agency on 31 March 2021. The transfer value was determined by the Government Property Agency who commissioned Montagu Evans (RICS registered valuer) to carry out a desktop valuation as at 31 March 2021. The transfer value provided by Government Property Agency was used as the final transfer value and GPA will show the receipt of this Land and Property transfer at that same value. See note 19 for further details of the transfer.

8.3 Investment properties

Investment properties comprised of a number of properties that are leased to third parties either in part or whole. These investment properties transferred to the Government Property Agency on 31 March 2021. Further information about HM Land Registry’s remaining leases is included in note 15.2.

The fair values of investment properties were determined by an external independent property valuer, having appropriate recognised professional qualifications and recent experience in the locations and categories of the properties being valued.

Pre-transfer each investment property is measured based upon active market prices adjusted where necessary for any difference in nature, location or condition of each specific property. The active market price is the market rent taking into account any expected or anticipated periods of non-occupancy by a future tenant.

9. Intangible assets

9.1 Cost or valuation

9.2 Cost or valuation

See note 1.10 for details of the intangible assets accounting policy.

The e-security, portal and Business Gateway assets had all been fully amortised by the start of the financial year, but are included in the accounts as they are still in use. Assets under development relate to the capitalisation of Local Land Charges costs during the year, case management improvements, mainframe to cloud-based migration and digital mortgage. More details about digital mortgage can be found on GOV.UK (search ‘HM Land Registry Digital Mortgage Service Contingent Liability’).

Assets under construction (AUC): Other has been restated in the prior-year to separate AUC: Other correctly between tangible and intangible assets.

10. Cash at bank and in hand

HM Land Registry’s financial assets are bank balances and cash, and trade and other receivables which represent the maximum exposure to credit risk in relation to financial assets. The credit risk is primarily attributable to trade and other receivables and is spread over a large number of customers. The amounts presented in the Statement of Financial Position are net of allowances for doubtful receivables, estimated by management based on past experience and an assessment of the current economic climate.

HM Land Registry’s bank balances were primarily held with the Government Banking Service, with limited funds retained within commercial banking facilities.

The ‘Commercial banks and cash-in-hand’ balance includes ‘Cash in transit’, with the associated bank accounts being in credit at year-end.

11. Trade and other receivables

11.1 Current

The average credit period taken on provision of services is 4.2 days. No interest is charged on the receivables. An allowance has been made for estimated irrecoverable amounts from the provision of services and this allowance has been determined by reference to past default experience.

Rents receivable are received and accounted for in advance of the occupancy period and the likelihood of non-collection of rents and credit risk exposure have both been determined as insignificant in terms of overall risk, with these assessments unchanged in light of the impact of coronavirus (COVID-19).

11.2 Non-current

The carrying amounts of trade and other receivables are deemed to be an approximation of their fair values.

12. Trade and other payables

12.1 Current

The average credit period taken for trade purchases is 2.4 days. The carrying amounts of trade payables are deemed to be an approximation of their fair values.

12.2 Non-current

13. Provisions for liabilities and charges

13.1 Early release schemes and other

The early retirement provision (ERP) gives retirement benefits to certain employees. These benefits conform to the rules of the Principal Civil Service Pension Scheme (PCSPS). HM Land Registry bears the cost of these benefits until the normal retirement age of the employees retired under the scheme. Total payments in the year amounted to £0.5m in 2020/21, of which £0.5m had been provided for within the ERP provision in the 2019/20 accounts. The total pension liability up to normal retiring age in respect of each employee is charged to the Statement of Comprehensive Income in the year in which the employee takes early retirement and a provision for future pension payments is created. Pension and related benefit payments to the retired employee until normal retiring age are then charged annually against the provision.

Other provisions relate to property dilapidation costs.

13.2 Indemnity Fund

The Land Registration Act 2002 places a legal liability on HM Land Registry to indemnify for losses resulting from errors or omissions on the register of title. This includes errors resulting from frauds perpetrated by third parties. As a statutory insurer of titles in England and Wales, indemnity payments are not confined to mistakes made by HM Land Registry. HM Land Registry provides for these claims under its Indemnity Fund both for known claims and claims incurred but not reported (IBNR).

Following the actuarial review by the Government Actuary’s Department (GAD), the fund in respect of reported but not settled claims (Outstanding Provision)has increased in 2020/21 by £1.2m (2019/20: £4.7m decrease). The provision for claims incurred but not reported (IBNR Provision) has decreased in 2020/21 by £3.8m (2019/20: £17.5m decrease).

The reason for the £1.2 million increase in outstanding claims is due to an increase in the value of claims received.

The £3.8 million IBNR Provision movement was as a result of lower projected claim numbers.

The Outstanding Provision for claims received but not yet settled is an estimate and as it involves projecting future payments, the final amounts paid on these claims is uncertain. The main uncertainties are:

• the proportion of outstanding claims that will ultimately be paid;
• the value of the payments made; and
• the effect of any legal judgements.

The presence of large outstanding claims can add significantly to this uncertainty.

The IBNR Provision is greater and inherently more uncertain than the Outstanding Provision. Unlike the Outstanding Provision, which is based on existing claims information, the IBNR Provision covers potential claims that may be made as a result of errors that have already been introduced into the register as a result of day-to-day update activity (either through fraud and forgery or administrative error). The main uncertainties within the IBNR Provision are:

• the number of unreported errors currently within the register is unknown
• at what point in the future these errors will be discovered and claims made
• how much the cost of the corresponding claims will be

Claims can take many years to be reported and subsequently settled.

In estimating the IBNR Provision, the actuary projects the number and timing of future claim reports and average claim sizes, using assumptions about claims settlement patterns, the expected effects of any known legal judgements and claims inflation. The resulting projected future claims cash flows are then discounted to a net present value at the accounting date using HM Treasury-prescribed discount rates.

The assumptions used in the projections are based on analysis of historical claims data, allowance for recent trends and consideration of the potential effects of underlying factors such as the volume of HM Land Registry activity and numbers of registered titles. We provide input to the actuaries on these assumptions, based on the knowledge of the legal team that handles the claims.

Uncertainty in the provisions – sensitivity analysis

The values of the Indemnity Fund Provisions are subject to future uncertain final settlement value, both for known claims and claims incurred but not reported (IBNR).
The uncertainty in value of outstanding claims could lead to a variation in the proposed provision. A range of scenarios have been considered in respect of the assumptions on:

• the proportion of claims that settle for zero
• the average claim size
• the HM Treasury prescribed discount rate
• the number of claims that will be received
• the rate of inflation

These scenarios have been considered in isolation and combination as shown in the sensitivity analysis table below.

On the basis of this analysis work it is reasonably foreseeable that the value of liabilities could be in the region of £7.7m (Outstanding Provision) or £62.9m (IBNR Provision).

It is possible that in extreme favourable scenarios the value of liabilities could be as little as £7.3m (Outstanding Provision) and £41.5m (IBNR Provision).

We have also considered extreme adverse scenarios, where the value of liabilities is as much as £8.1m (Outstanding Provision) and £84.9m (IBNR Provision). The long-term open-ended nature of statutory indemnity means that these figures do not represent the maximum possible liability. However, we believe the likelihood of such scenarios to be small.

The degree of uncertainty at future accounting dates may be different from that illustrated here. This could be for a number of reasons, for example because the profile of claims has changed or because the outlook on future claim trends has changed.

At future accounting dates, it should be expected that:

• the outstanding provision will fluctuate depending on the volume of claims reported at the time, especially large claims
• all else being equal, the IBNR Provision will increase over time because of inflationary forces
• both the Outstanding Provision and the IBNR Provision will be particularly sensitive to the number and value of fraud and forgery claims as these are the most financially significant category of claims

The Indemnity Fund Provision of £70.6m is a best estimate. Additionally, the future values of Indemnity Fund Provisions are subject to inherent uncertainties.

Sensitivity analysis

14. Contingent liabilities

14.1 Indemnity

The Land Registration Act 2002 places a legal liability on HM Land Registry to indemnify for losses resulting from errors or omissions on the register of title. This includes errors resulting from frauds perpetrated by third parties. As a statutory insurer of titles in England and Wales, indemnity payments are not confined to mistakes made by HM Land Registry. HM Land Registry provides for these claims under its Indemnity Fund both for known claims and claims incurred but not reported (IBNR) (see Note 13.2) based upon the assumed likelihood that claims will be successful.
As at 31 March 2021, the value of pending indemnity claims made to HM Land Registry is shown below. The estimated settlement value of these claims included within the Indemnity Fund Provision is £7.7m (see note 13.2).

14.2 Employment tribunals

At 31 March 2021, HM Land Registry has three employment tribunal cases, which are considered contingent liabilities. At this time, it is not possible to estimate the likely outcomes and timings.

15. Obligations under leases

15.1 Finance leases

Minimum lease payments

Present value of minimum lease payments

15.2 Operating leases

Leases as lessee

At the Statement of Financial Position date, HM Land Registry had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows.

Operating lease payments represent rentals payable by HM Land Registry for land and buildings, including the Nottingham and Peterborough local offices.

Leases as lessor

HM Land Registry leases investment properties (see note 8.3).

At 31 March the future minimum lease payments under non-cancellable leases are receivable as follows.

During the year, rental income from investment properties of £0.2m was receivable. Whereas previously the properties were let under Memorandum of Terms of Occupation (MOTO) to other public sector organisations, these are now let on commercial terms.

16. Capital commitments

17. Related party disclosures

In accordance with IAS 24 Related Party Disclosures, as interpreted by the FReM, the following information is provided on related party transactions.

On 1 April 2020, HM Land Registry became a non-ministerial department. During 2020/21, HM Land Registry had a number of material transactions with other government departments and other central government bodies. Most of these transactions have been with Ordnance Survey and HM Courts and Tribunals Service.

None of the Board members, or members of the key management staff or other related parties, have undertaken any material transactions with HM Land Registry during the year.
The Remuneration report provides information on key management compensation.

18. Prior year restatements 2019/20

In accordance with a direction from HM Treasury, HM Land Registry is now producing an annual Trust Statement, which reports the revenue and other income collected by the department and payable into the Consolidated Fund. This new statement results in the following restatements of amounts previously reported in the HM Land Registry Annual Report and Accounts.

1. In 2019/20, HM Land Registry recognised Contract Assets of £9,845k (2018/19: £5,670k), which related to incomplete applications that had been partially processed and have incurred costs. As income is now reported in the Trust Statement and surrendered to HM Treasury, no contract assets are recognised and costs reported in the year in which they were incurred. The £9,845k of contract assets included £4,175k of costs relating to 2018/19 that are now recognised as expenditure in the restated comparatives.
2. Within the Dividend Payable line, £2,675k represents the payment made to the Consolidated Fund in relation to the sale of goods and services reported in the Departmental Accounts. This can be seen in the Statement of Changes in Taxpayers’ Equity.
3. Assets under construction (AUC): Other has been restated in the prior-year to separate ‘AUC: Other’ correctly between tangible and intangible assets.

19. Government Property Agency transfer of freehold and leasehold assets

On 31 March 2021, HM Land Registry entered into agreement with the Government Property Agency (GPA), an executive agency of the Cabinet Office, to transfer the following freehold properties owned by HM Land Registry, alongside the majority of HM Land Registry’s long-leasehold properties, including all revaluation reserve balances associated with the assets shown below.

This transfer includes a transfer of legal ownership of land, buildings and any associated components that are a result of subsequent enhancements since recognition of the original asset.

The assets were transferred to the GPA on 31 March 2021 at nil consideration and in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, they were transferred at fair value resulting in a capital grant in kind expense of the same amount.

We will begin to pay rent per the terms set out in the Occupation Agreement that was signed on 23 December 2020, between us and GPA commencing 1 April 2021.

All freehold and leasehold assets were subject to a professional valuation by Montagu Evans as of 31 March 2021, the date of the transfer and the reporting date. Any movements in book value as a result of this revaluation were adjusted prior to the transfer to the GPA.

20. Events after the reporting period

In accordance with the requirements of IAS 10 Events After the Reporting Period, events after the Statement of Financial Position date are considered up to the date on which the financial statements are authorised for issue. This is interpreted as the date of the certificate and report of the Comptroller and Auditor General.

HM Land Registry Trust Statement 2020/21

(For the year ended 31 March 2021)

Statement of Accounting Officer’s responsibilities

Under the Exchequer and Audit Departments Act 1921, HM Treasury has directed the HM Land Registry to prepare, for each financial year, a Trust Statement (“the Statement”) in the form and on the basis set out in the Accounts Direction. The Statement is to be prepared on an accruals basis and must give a true and fair view of the state of affairs of the fees and charges, and of the related expenditure and cash flows for the financial year.

In preparing the accounts and trust statement, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by HM Treasury, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
• make judgements and estimates on a reasonable basis
• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the accounts
• prepare the accounts on a going concern basis
• confirm that the Annual Report and Accounts as a whole is fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable

The Permanent Secretary at HM Treasury has appointed the Chief Executive and Chief Land Registrar as Accounting Officer of HM Land Registry. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the HM Land Registry’s assets, are set out in Managing Public Money published by HM Treasury.

As the Accounting Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that HM Land Registry’s auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware.

Governance Statement

As the Accounting Officer for HM Land Registry I have responsibility for maintaining corporate governance structures that support the achievement of HM Land Registry’s aims, objectives and targets, while safeguarding public funds and HM Land Registry’s assets.

HM Land Registry operates and follows the principles of good governance in accordance with HM Treasury guidance. The Governance Statement, which covers all aspects of HM Land Registry, including those reported here in this Trust Statement, is provided in the Accountability report.

Simon Hayes
Chief Executive and Chief Land Registrar
7 July 2021

The Certificate and Report of the Comptroller and Auditor General to the House of Commons

Opinion on financial statements

I certify that I have audited the financial statements of HM Land Registry for the year ended 31 March 2021 under the Government Resources and Accounts Act 2000. The financial statements comprise: HM Land Registry’s Statements of Comprehensive Net Expenditure, Financial Position, Cash Flows, Changes in Taxpayers’ Equity; and the related notes, including the significant accounting policies. These financial statements have been prepared under the accounting policies set out within them. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards as interpreted by HM Treasury’s Government Financial Reporting Manual.

I have also audited the Statement of Parliamentary Supply and the related notes, and the information in the Accountability Report that is described in that report as having been audited.

In my opinion, the financial statements:

• give a true and fair view of the state of HM Land Registry’s affairs as at 31 March 2021 and of the net expenditure for the year then ended
• have been properly prepared in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions issued thereunder

Opinion on regularity

In my opinion, in all material respects:

• the Statement of Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2021 and shows that those totals have not been exceeded
• the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (ISAs) (UK), applicable law and Practice Note 10 ‘Audit of Financial Statements of Public Sector Entities in the United Kingdom’. My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I have also elected to apply the ethical standards relevant to listed entities. I am independent of HM Land Registry in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that HM Land Registry’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on HM Land Registry’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Accounting Officer with respect to going concern are described in the relevant sections of this certificate.

The going concern basis of accounting for HM Land Registry is adopted in consideration of the requirements set out in HM Treasury’s Government Reporting Manual, which require entities to adopt the going concern basis of accounting in the preparation of the financial statements where it anticipated that the services which they provide will continue into the future.

Other Information

The other information comprises information included in the Annual Report, but does not include the parts of the Accountability Report described in that report as having been audited, the financial statements and my auditor’s certificate thereon. The Accounting Officer is responsible for the other information. My opinion on the financial statements does not cover the other information and except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters

In my opinion, based on the work undertaken in the course of the audit:

*the parts of the Accountability Report to be audited have been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000
* the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements

Matters on which I report by exception

In the light of the knowledge and understanding of HM Land Registry and its environment obtained in the course of the audit, I have not identified material misstatements in the Performance and Accountability Report. I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• adequate accounting records have not been kept or returns adequate for my audit have not been received from branches not visited by my staff
• the financial statements and the parts of the Accountability Report to be audited are not in agreement with the accounting records and returns
• certain disclosures of remuneration specified by HM Treasury’s Government Financial Report Manual are not made
• I have not received all of the information and explanations I require for my audit
• the Governance Statement does not reflect compliance with HM Treasury’s guidance

Responsibilities of the Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Accounting Officer is responsible for:

• the preparation of the financial statements in accordance with the applicable financial reporting framework and for being satisfied that they give a true and fair view
• internal controls as the Accounting Officer determines is necessary to enable the preparation of financial statement to be free from material misstatement, whether due to fraud or error
• assessing the HM Land Registry’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Government Resources and Accounts Act 2000.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulation, including fraud.

My procedures included the following:

• Inquiring of management, HM Land Registry’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the HM Land Registry’s policies and procedures relating to:
  • identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance
  • detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
  • the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including HM Land Registry’s controls relating to The Land Registration Act 2002, the Land Registration Rules 2003, the Agricultural Credits Act 1928 and the Land Charges Act 1972
• discussing among the engagement team and involving relevant internal and or external specialists, including relating to the Indemnity Fund regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, I identified potential for fraud in the following area: revenue recognition and posting of unusual journals
• obtaining an understanding of HM Land Registry’s framework of authority as well as other legal and regulatory frameworks that HM Land Registry operates in, focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations of HM Land Registry. The key laws and regulations I considered in this context included the Government Resources and Accounts Act 2000, Managing Public Money, Supply and Appropriation (Main Estimates) Act 2020 and employment, tax and pensions legislation

In addition to the above, my procedures to respond to identified risks included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations discussed above
• enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation and claims
• reading minutes of meetings of those charged with governance and the Board
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business

I also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and significant component audit teams and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website. This description forms part of my certificate.

I am required to obtain evidence sufficient to give reasonable assurance that the Statement of
Parliamentary Supply properly presents the outturn against voted Parliamentary control totals and that those totals have not been exceeded. The voted Parliamentary control totals are Departmental Expenditure Limits (Resource and Capital), Annually Managed Expenditure (Resource and Capital), Non-Budget (Resource) and Net Cash Requirement. I am also required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in
the financial statements conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Report

I have no observations to make on these financial statements.

Gareth Davies, 7 July 2021
Comptroller and Auditor General National Audit Office
157-197 Buckingham Palace Road Victoria
London
SW1W 9SP

Trust statement financial statements

Statement of Revenue, other income and expenditure as at 31 March 2021.

Special Dividend paid in 2019/20 relates to historic income paid over to HM Treasury when HM Land Registry transitioned to a department from a trading fund.

There were no recognised gains or losses accounted for outside the above Statement of Revenue, Other Income and Expenditure.

The notes form part of this statement.

Statement of Financial Position as at 31 March 2021

The notes form part of this statement.

Simon Hayes
Chief Land Registrar and Chief Executive
7 July 2021

Statement of cash flows for the year ended 31 March 2021

The notes form part of this statement.

Notes to the Trust Statement

1. Statement of Accounting Policies

1.1 Basis of accounting

The Trust Statement is prepared in accordance with:

*the 2020/21 Financial Reporting Manual (FReM) issued by HM Treasury, in particular Chapter 8.2 which deals with Consolidated Fund revenue and Trust Statements. The accounting policies
contained in the FReM apply International Financial Reporting Standards (IFRS) as interpreted for the public sector
*the accounts direction issued by HM Treasury under section 2 (3) of the Exchequer and Audit Departments Act 1921

The accounting policies adopted in the Trust Statement are described below. The accounting policies have been applied consistently in dealing with items considered material in relation to the accounts.

The income and associated expenditure contained in these statements are those flows of funds which HM Land Registry handles on behalf of the Consolidated Fund and where it is acting as agent rather than principal.

The financial information contained in these statements and in the notes is rounded to the nearest £’000.

1.2 Changes in accounting policy and disclosures

There have been no changes in accounting policies for the reporting period. New standards, amendments and interpretations issued but not effective for the financial year beginning 1 April 2021 and not early adopted:

• IFRS 16 Leases came into effect on 1 January 2019 and replaced IAS 17 Leases. However, HM Treasury (HMT) recommended that government departments defer the adoption of this accounting standard until 1 April 2022 although some departments were permitted early adoption in limited circumstances. HM Land Registry has elected to adopt this standard from 1 April 2021. However, all leases are held in the Departmental Accounts and there is no impact on the Trust Statement
• IFRS 17 Insurance Contracts will become effective from 1 January 2023 for public sector organisations. This reporting standard is
  anticipated to have no accounting impact upon HM Land Registry as no such insurance contracts are held

1.3 Accounting convention

The Trust Statement has been prepared under the historical cost convention. The preparation of the accounts in conformity with IFRS requires the use of certain critical accounting estimates (see note 1.6). It also requires management to exercise its judgement in the process of applying the accounting policies.

1.4 Revenue recognition

Fees and charges are measured at the fair value of amounts received and in accordance with IFRS 15. Fees and charges are derived from the Land Registration Fee Order 2013. They are included within the financial statements of the financial year in which the service is delivered. Income is recognised net of any refunds for transactions that are not completed, or on transactions where erroneous information is provided by customers.

Registration of title and Land Charges and Agricultural Credits income is recognised upon receipt of a completed application. If an application is not complete, the amount received is treated as a fee in advance, regardless of application type. All application types are accounted for consistently. The associated payment amounts received for services not delivered in the financial year reported are subsequently recorded as contract liabilities and disclosed within current liabilities.

Income is recognised once the contract performance obligation under IFRS 15 has been fulfilled, that is once the register has been fully updated following receipt of an application.

1.5 Receivables

Receivables are shown net of impairments in accordance with the requirements of IFRS 9. Receivables are derecognised when the rights to receive cash flows from the assets have expired.

1.6 Critical accounting judgements and estimates

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

When preparing the Trust Statement, HM Land Registry makes estimates and assumptions concerning the future. The most significant judgement area in the preparation of this Trust Statement relates to revenue recognition and the calculation of the deferred revenue balance, which requires a judgement on the percentage of work complete for outstanding applications. Further details on revenue recognition is contained in Note 1.4.

1.7 Impairment of debt and credit losses

Receivables are shown net of impairments in accordance with the requirements of the FReM and IFRS 9. The fair value of receivables is determined by making an impairment to reduce the carrying value of receivables to the estimated future flow of repayments.

HM Land Registry is not exposed to credit risk under IFRS 7 Financial Instruments.

In accordance with Managing Public Money, HM Treasury has powers to direct that income included in a departmental Estimate and approved by Parliament may be retained and used by the department. This is undertaken by applying this income against specific costs (resource or capital) within that Estimate. Where

HM Land Registry receives income outside that authority, the cash must be surrendered to the Consolidated Fund.

2. Revenue and other income

3. Receivables

3.1 Current receivables

Receivables represents the amount due from taxpayers and businesses where invoices or other demands for payment have been issued but not paid for at 31 March 2021. Debts are written off only when the debtor is dissolved, bankrupt or in liquidation and the debt is deemed unrecoverable through any further means.

Individual application receipts are only processed once the relevant fee has been accounted for. The total collectable is spread over a high volume of different customers with associated low-value fees. Accordingly, the likelihood of non-collection of fees and credit risk exposure have both been determined as insignificant in terms of overall risk, with these assessments unchanged in light of the impact of the coronavirus (COVID-19).

3.2 Non current receivables

There are no amounts falling due after more than one year.

3.3 Credit losses

4. Payables and deferred revenue

4.1Current payables

Payables are the amounts established as due at the balance sheet date, but where payment is made subsequently.

Deferred revenue includes income for fees paid in the current year that relate to future financial periods.

4.2 Non-current payables

There are no amounts falling due after more than one year.

5. Balance on the Consolidated Fund Account

6. Related party disclosures

In accordance with IAS 24 Related Party Disclosures, as interpreted by the FReM, the following information is provided on related party transactions.

On 1 April 2020, HM Land Registry became a non- ministerial department.

None of the Board members, or members of the key management staff or other related parties, have undertaken any material transactions with HM Land Registry during the year.

The Remuneration report provides information on key management compensation.

7. Events after the reporting period

In accordance with the requirements of IAS 10 Events After the Reporting Period, post year end events are considered up to the date on which the accounts are authorised for issue. This is interpreted as the date of the Certificate and Report of the Comptroller and Auditor General. The accounts do not reflect events after this date.

There are no subsequent events to report.