APPENDIX A CORPORATE DEBT RECOVERY POLICY

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1 CORPORATE DEBT RECOVERY POLICY

2 CONTENTS: 1 Introduction 2 Policy Aims 3 Scope of the Policy 4 Policies common to all types of debt 5 Principles of Recovery 6 Methods of Payment 7 Write offs Appendices Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 Council Tax and NNDR Recovery Policy Housing Benefit Overpayments Recovery Policy Sundry Debt Recovery Policy Parking Enforcement Recovery Policy Collection Costs and Fees Policy Bankruptcy Policy Enforcement Agent Code of Practice for Council Tax and NNDR

3 1. INTRODUCTION 1.1 Effective debt management is crucial to the success of any organisation. In 2013/14 Scarborough Borough Council generated in excess of 21.7million in fees and charges, and raised bills totalling 57.7 million in respect of Council Tax and 32.8 million in respect of NNDR (Business Rates). The Council relies on these sources of income to provide core funding for its services therefore the Council must adopt a policy to support the maximisation of debt recovery and income collection; ensuring that billing, collection and recovery of all sums due to it are managed in a cost effective, consistent and sensitive manner. 1.2 It is essential that all monies due to the Council are collected efficiently and that amounts owed to the Council are kept to a minimum. The Council has a duty to ensure that income due is paid promptly and acknowledges that every pound of income that is not collected, or takes extra effort to collect, has budgetary implications and will lead to one or both of the following outcomes: a. Cuts in the budgets available to run Council services; or b. The need to generate additional income by increasing fees and charges 1.3 Sums due to the Council can be a mixture of statutory and non-statutory charges. The methods for billing and recovery of statutory debts are tightly prescribed by statute and our policy and practices must take into account these legislative requirements. 1.4 This document sets out the general principles Scarborough Borough Council will apply to debt management across all services we provide.

4 2. POLICY AIMS 2.1 The aims of the Corporate Debt Recovery Policy are: To apply best practice to debt collection. To promote a coordinated approach towards sharing debtor information and managing multiple debts owed to the Council. To reduce the number of demands being raised by promoting payment in advance for goods and services where possible. To ensure a professional and timely approach to recovery action. To consider the debtors circumstances and ability to pay fully to distinguish between the debtor who won t pay and the debtor who genuinely can t pay. To treat individuals consistently and fairly regardless of age, gender, disability and sexual orientation. To improve the levels of income collected by the Authority. To balance the potential loss of income to Scarborough Borough Council against the cost of compliance and recovery.

5 3. SCOPE OF THE POLICY 3.1 This policy applies to the collection of: Council Tax Non-Domestic Rates (Business Rates / NNDR) Housing Benefit Overpayments Sundry Debts Car Parking Enforcement Debts

6 4. RECOVERY POLICIES COMMON TO ALL TYPES OF DEBT 4.1 Every demand for money will be correctly addressed to the person who is liable to pay it. The name on the demand will be that of a person or body possessing legal personality as far as possible based on the information available. 4.2 Demands will, wherever possible, be issued as soon as practicable and, if possible, on the day of production. 4.3 Demands and all communications from the Council will be written in plain English. 4.4 All notices issued by the Council will comply with the corporate style guidance and be readily identifiable as being from the Council. 4.5 The Council will attempt at all times to use the most appropriate and effective method of debt recovery in order to maximise income. 4.6 Service providers must endeavour to obtain payment in advance or at the time of service delivery wherever possible. Invoices should only be raised where payment in advance for a service is inappropriate. 4.7 The Council will encourage the most cost effective payment methods with emphasis being on unmediated electronic means where possible. Unmediated in the context of electronic payment methods means a method of payment that requires no human intervention by officers of the Council to achieve its crediting to the account in question. 4.8 Where the potential for a statutory discount, including Local Support for Council Tax, exists in relation to the debt efforts will be made to make the debtor aware of such opportunities and they will be assisted and encouraged to apply for these. 4.9 The Council welcome the involvement of welfare agencies in connection with debts due to the Council and recognise the benefits that these organisations can offer both the debtor and the Council in prioritising repayments to creditors and in maximising income available to the debtor The Council will continue to explore alternative and appropriate methods to engage with debtors in the most appropriate and effective way (e.g. text, , self-service) 4.11 Equality and diversity considerations will be taken into account. Specifically staff seeking to recover debts will have regard to ensuring information is accessible through translations or sign language No persons or groups of persons will receive less favourable treatment than any other on the grounds of race, colour, ethnic origin, nationality, age, sex, marital status, disability, sexual orientation, Trade Union activity, political or religious beliefs The Council recognises that prompt recovery action is key in managing its debt and maximising income. The Council therefore aims to: Regularly monitor the level and age of debt.

7 Set clear targets for the recovery of debt. Have clear written recovery procedures. Set priorities for specific areas of debt and assess recovery methods to ensure maximum recovery. Regularly review irrecoverable debts (and those where recovery is not economic) for write-off Where an external agency is procured to assist with debt recovery the flow of information between the Council and the agency should, wherever possible, be in a secure electronic format Where legislation permits, the Council will seek to levy and recover from the debtor any and all costs/fees that are legitimately due from the debtor to the Authority or its agents. Only in exceptional cases, where it would not be in the public interest to pursue costs/fees will they be waived Any disputes raised by a customer in respect of recovery actions taken by the Council will be dealt with by a senior member of the team responsible for the recovery of a debt. If the issue is not resolved to the customer s satisfaction the issue will be dealt with through the Council s established corporate complaints system.

8 5. GENERAL RECOVERY PRINCIPLES 5.1 The Council will take into account the following general principles in respect of recovery and enforcement to mitigate the possibilities of inappropriate action and to improve the cost effectiveness of recovery processes: Our action will be proportionate Our approach will be consistent Our actions will be transparent Our approach will be firm and fair, and our manner will be courteous 5.2 Proportionality Proportionality allows a balance to be struck between the potential loss of income arising from the non-collection of a debt and the costs of recovery. The value of the debt that remains unpaid at a particular time will be considered in determining the action taken against any debtor. 5.3 Consistency Consistency means taking a similar approach in similar circumstances to achieve similar outcomes. By adopting a consistent approach for the recovery of all debts it ensures that all debtors will be treated fairly and equally. The Council aims to achieve consistency in: The advice it gives The use of its powers; and The recovery procedures used The Council recognises that consistency does not mean simple uniformity and officers will be encouraged to take into account many variables such as: The size of debt outstanding The social circumstances of the debtor The debtor s payment history; and The debtor s ability to pay 5.4 Transparency Transparency helps people to understand what is expected of them and what they should expect from the Council. It also means explaining clearly the reasons for taking any recovery / enforcement action. If recovery action is required: The reasons why must be clearly explained, in writing Timescales must be clearly stated; and A distinction must be made between advice and legal requirements.

9 An opportunity must be given to discuss what is required to comply with the law before formal enforcement action is taken. A written explanation must be given of any rights of appeal against formal enforcement action either before or at the time the action is taken.

10 6. METHODS OF PAYMENT 6.1 The Council s preferred method of payment is Direct Debit. However this does not prohibit accepting payment by other methods. 6.2 The Council currently accepts the following forms of payment: Direct Debit Debit / Credit Card Payments o Via the Automated Telephone System (ATP); or o Online via the Council s Website Cash (via Allpay using a bar-coded bill / invoice) Cheque (via post or at the Post Office with a barcoded bill) BACS / CHAPS Standing Order (only in exceptional circumstances where DD is not available) 6.3 The Council will continue to seek to increase Direct Debit take up by debtors as it is a cost effective and convenient method of payment both for the Council and its debtors. 6.4 To encourage debtors to pay invoices by Direct Debit the Council is considering applying a surcharge to some categories of debt (e.g. rental invoices) where the debtor opts to pay via other methods. The surcharge will recognise the additional administrative costs associated with debts not collected by Direct Debit. This option is only being considered for some categories of sundry debt and is not being considered for Council Tax or NNDR demands where the enabling legislation does not facilitate this option. 6.5 The Council does not currently pass the cost of credit card charges on to those debtors who choose to pay by credit card however the cost of this will be monitored and reviewed annually.

11 7. WRITE OFFS 7.1 The Council recognises that where debts are irrecoverable it is good practice to write them off promptly and regularly. 7.2 The Council will seek to minimise the cost of write-offs by having controls in place to limit the amount of debt that arises and taking all necessary action to recover what is due. All debts will be subject to the full collection, recovery and legal procedures as outlined in the following appendices to this policy: Appendix 1 Council Tax and NNDR Recovery Policy Appendix 2 Housing Benefit Overpayments Recovery Policy Appendix 3 Sundry Debt Recovery Policy Appendix 4 Parking Enforcement Recovery Policy 7.3 The limitations for writing off irrecoverable debts are contained within the Council s Financial Procedure Rules. The Rules currently stipulate that debts up to a value of 50,000 can be authorised by the Council s s151 Officer (Director of Business Support). Any debt above this amount will be referred to Cabinet. The Director of Business Support has delegated a number of officers with the authority to approve write offs up to the specified levels. The table below summarises write off authorities by Officer: DEBT OFFICER LEVEL Council Tax, NNDR, Sundry Debts, and Housing Benefit Overpayments Council Tax, NNDR, Sundry Debts, and Housing Benefit Overpayments Council Tax, NNDR Sundry Debts and Housing Benefit Overpayments S151 Officer Corporate Finance Manager Local Taxation Manager Transactional Finance Manager 50,000 From Council s Constitution Financial & Contract Procedure Rules (Section 2) 50,000 (as Deputy s151 Officer) Car Parking Enforcement Debts Car Parking Manager It is not possible to list every scenario which could make a debt suitable for write off, however the following factors could be appropriate depending on the circumstances: The debt has been remitted by a Magistrate

12 The debtor is subject to formal insolvency proceedings and there is little likelihood of a dividend or repayment. The chargepayer is deceased and there are no funds from the estate The Council has evidence to confirm the debtor is suffering a severe mental or physical illness which renders enforcement action inappropriate The Council is unable to trace the debtor It is uneconomical to pursue the debt due to the outstanding balance being small. The cost of proceedings outweighs the likelihood or level of payment There is insufficient or incomplete documentary evidence to back up and pursue the claim. The age of the debt renders it statute barred (Statute of Limitations Act)

13 COUNCIL TAX AND BUSINESS RATES RECOVERY POLICY INTRODUCTION APPENDIX Council Tax is a tax levied on all eligible domestic dwellings. Business Rates are a tax levied on eligible business properties. The amount of Council Tax levied is dependent on the Council Tax band that the property falls into and the Council Tax levels agreed by the precepting authorities (North Yorkshire County Council, Police and Crime Commissioner for North Yorkshire, North Yorkshire Fire and Rescue, and Scarborough Borough Council) for the financial year. The amount of Business Rates is dependent on the rateable value of the property and the nationally set rating multiplier. 1.2 The full rate of tax is liable to be paid unless the property, owner or occupier is eligible for a reduction or exemption. The main reasons for reductions include empty property discounts, local support for Council Tax for residents on low income, disregards, single occupancy discounts and property exemptions. Small Business Rate relief, charitable and other discretionary reliefs also apply. 1.3 Council Tax and Business Rates are payable in line with a statutory instalment scheme or by agreement. There is a legal duty placed on the Council and its Officers to collect outstanding debts in accordance with the Council Tax (Administration and Enforcement) Regulations 1992 and the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (as amended). POLICY AIMS 1.4 The Recovery policy will ensure that: The Council will bill, collect and recover all debts in an economic, effective and efficient manner in accordance with legislation and best practice. All taxpayers and ratepayers are treated fairly and objectively. Action taken will be fair and open, no-one will receive less favourable treatment because of their race, nationality, colour, ethnic or national origin, religious belief, gender, marital status, sexual orientation, age or disability. POLICY 1.5 The Council will bill, collect and recover all debts in an economic, effective and efficient manner in accordance with legislation and best practice. Demand notices and adjustment notices will be issued in accordance with regulations. A recovery timetable will be drawn up before the beginning of each financial year. Reminders and final notices will be issued at least 14 days after an instalment has fallen due.

14 A summons to the Magistrates Court will be issued if full payment has not been made in accordance with the previously issued notice. If settlement is still not made an application will be made to the Magistrates to grant a Liability Order. 1.6 At all stages, including following the grant of a Liability Order, the debtor will be given an opportunity to make a suitable payment arrangement. If a Liability Order has been granted however there may be additional costs awarded by the Magistrates to collect in addition to the principal debt (see Appendix 5 for details). 1.7 Should the debtor not make or keep to a payment arrangement the following recovery action(s) can be taken. The recovery action(s) will be dependent on the circumstances of each individual case. i. Attachment of Earnings For Council Tax debts deductions are made from the debtor s wages at a rate determined by legislation. ii. Deductions from Income Support, Job Seeker s Allowance and Employment Support Allowance For Council Tax debts deductions are made from the debtor s benefits at a rate determined by legislation. iii. Taking Control of Goods use of Enforcement Agents Enforcement Agents employed or contracted by the Council will be required to comply with the Taking Control of Goods Regulations 2013, Service Level Agreement(s) and the Tribunals, Courts and Enforcement Act 2007 at all times. iv. Bankruptcy/Liquidation If sufficient assets exist to meet the outstanding debt the Council can petition for Bankruptcy/Liquidation. v. Charging Orders An order is placed on the debtor s property to secure the debt. County Courts are empowered to order the sale of the dwelling if the debtor does not pay. vi. Committal The Council can make an application to the Magistrates Court to instigate action that could ultimately result in the debtor being sent to prison for non-payment. vii. Attachment of Allowances Deductions are made from Elected Members Allowances. 1.8 The Council reserves the right to pursue the most appropriate of the above recovery methods depending on the specific personal and financial circumstances of the debtor.

15 1.9 Information relating to the officers authorised to undertake actions in relation to Council Tax and Business Rate collection are contained and reviewed annually in the Council Tax Resolution as presented to Full Council.

16 APPENIDX 2 HOUSING BENEFIT OVERPAYMENTS RECOVERY POLICY INTRODUCTION 1.1 Housing Benefit is an income which can be claimed to assist in paying rent. It is claimed by single people and households on low incomes. The Council s Benefits Section assesses claims for entitlement and amends claims already in payment when circumstances change. 1.2 A Housing Benefit overpayment is created when a claimant has been paid more benefit than they were entitled to. Overpayments can occur for a number of reasons, for example, the claimant leaves the area and does not notify the Council in time for their claim to be amended, or the claimant increases their hours at work and is no longer entitled to the same level of benefit, etc. 1.3 Under the Housing Benefit scheme the Council can claim back approximately 40% of sums overpaid from Central Government through Housing Benefit Subsidy. If the council does not collect the remaining 60% from the recipients of the overpayments then this shortfall needs to be funded from Council resources. 1.4 The Council s Benefits Section applies the relevant legislation to calculate overpayments and determines whether amounts overpaid are recoverable and, if so, who they should be recovered from. The Benefits Section also determines whether the overpayment will be recovered by making deductions from a claimant s on-going Housing Benefit payments or through the issue of an invoice. The Benefit Section issues decision letters advising those affected of overpayments. 1.5 There is a formal appeals process which is detailed in the Housing Benefit legislation. An appeal (provided it meets the appropriate criteria) can be made regarding the amount and reason for the overpayment as well as the decision from whom recovery will be sought. 1.6 The decision whether a recoverable overpayment should be recovered, or the method by which an overpayment is recovered, are not decisions that are subject to the appeals process. Appeals are dealt with by the Benefits Section. 1.7 The Accounts Receivable Section deals with recovery of Housing Benefits overpayments after the issue of initial decision letters. The method of recovery is not governed by legislation. 1.8 A separate document entitled Overpayment Recovery Strategy is available which details the practical (operational) aspects of the recovery procedures. POLICY AIMS 1.9 The Recovery policy will ensure that: The Council will bill, collect and recover overpaid Housing Benefit in an economic, effective and efficient manner in accordance with legislation and best practice. All debtors are treated fairly and objectively and that procedures are applied consistently.

17 Action taken will be fair and open, no-one will receive less favourable treatment because of their race, nationality, colour, ethnic or national origin, religious beliefs, gender, marital status, sexual orientation, age or disability. POLICY 1.10 The Council will identify the overpayment promptly and correctly and notify the claimant and any other person affected by an overpayment. The form of this notification will comply with relevant benefits legislation The Council will decide whether an overpayment is recoverable, and if it is: i) Determine whether it should be recovered, ii) iii) Who it should be recovered from, and How it should be recovered Recovery will commence immediately upon the identification of an overpayment. If the liable party wishes to formally dispute the overpayment (formal appeal), recovery will be held in abeyance pending the outcome of that dispute If a debtor is reclaiming Housing Benefit, and there is a possibility that the subsequent claim may reduce the overpayment, then the overpayment will be held in abeyance for an appropriate period of time. In these instances, the overpayments will be closely monitored to ensure that recovery can recommence in a timely manner, if circumstances change The full amount of the overpayment will be recovered, unless, after having regard to the health, personal and financial circumstances of the debtor it is deemed that a lesser amount would be more appropriate. In these instances, the decision will be documented and approved by the Council s Transactional Finance Manager In all cases, overpayments will be recovered as quickly as possible; however, this does depend on the debtor s needs as well as the Council s. Staff will recognise the importance of balancing the debtor s needs with the needs of its Local Taxpayers Consideration will always be given to the amount of the debt, the cost of action, and the likely outcome of the action. Efforts of staff to recover overpayments should follow the most appropriate action depending on the individual circumstances of that case. Staff will follow the internal Overpayment Recovery Strategy and methods used will be appropriate, efficient and focused at the least cost to the council There are several different methods of recovery available to local authorities. In determining the appropriate method it is important to note whether or not the liable person is a claimant or a landlord as there are different methods of recovery available Methods of recovery available relating to individuals are shown below. These methods will generally be applied in this order of priority: - i. Deductions from Housing Benefit Arrears The Council will make deductions from any arrears in Housing Benefit owed to the debtor.

18 ii. Deductions from Ongoing Housing Benefit The Council will recover amounts due by making deductions from any ongoing Housing Benefit that the debtor is entitled to For ongoing Housing Benefit deductions, the prescribed (legislative) rates will be used. The Council is obliged to have due regard to the debtor s circumstances to ensure that undue hardship is not caused. Debtors are invited to contact the council to negotiate lower deductions if they are able to demonstrate financial hardship. In these instances, the debtor will be required to provide details of income and expenditure together with supporting documentation. A decision will then be made as to an appropriate rate. Regulations state that in all cases, a minimum of 50p per week of Housing Benefit must be made. iii. Invoice The individual will be issued with an invoice and will be expected to contact the Council to arrange suitable payment terms if they are unable to settle the invoice in full. iv. Direct Earnings Attachment Deductions will be made from the debtor s wages at a rate determined by legislation. In cases of hardship the council is able to request that the employer deducts a lower rate but this would be in exceptional circumstances. v. Deductions from other benefits due to be paid either by other councils or the DWP Housing Benefit legislation provides that overpaid Housing Benefit may also be recovered from deductions from some state paid benefits (e.g. Employment and Support Allowance etc). Councils are also able to made deductions from Housing Benefit payments to recover overpayments owed to other councils. However, it should be noted that this is not mandatory and some councils have a policy to refuse to recover overpayments for other councils. Scarborough Council will recover overpayments for other councils where reciprocal arrangements are available. vi. External Collection Agents External Collection Agents are used if other methods are either unavailable or unsuccessful or there is a difficulty engaging with the debtor. The council currently has a framework agreement with a number of agents which can be used. Benefit claims continue to be reviewed whilst cases are with an external agent as it may be beneficial to recover the overpayment from on-going Housing Benefit if they have reclaimed after the case was referred externally.

19 vii. County Court Action Councils are able to use a fast tracking procedure to obtain Judgment (CCJ) The County Court is involved in enforcing (collecting) overpayments and if it grants an order it can be enforced as if it were a County Court judgment. A copy of the order will be sent to the Council and the debtor. Although there is no right of appeal to the Court against the overpayment, an application for the setting aside of an order (CCJ) can be made. For example, if the Benefit notification is defective or appeal rights are ignored by the Council. The costs incurred in obtaining a Court Order will be recharged to the debtor. viii. Further Legal Action Once Judgment has been obtained further legal action then becomes available. The action chosen will depend upon the debtor s willingness to repay and after taking account of their individual circumstances. Options for further action include: - An Attachment of Earnings Order A Warrant of Control - collection of sums due or removal of goods to a sale room Order to Obtain Information order to compel the debtor to attend a hearing to provide requested information. This is usually details of the debtor s income and assets A Charging Order (on a property), followed by an Order for Sale, if necessary A Bankruptcy / Winding Up Order 1.19 Methods of recovery available relating to landlord overpayments are shown below. These methods will usually be applied in the following order:- i. Invoice ii. iii. iv. Deductions from Housing Benefit paid to that landlord in respect of other tenants benefit (landlord recovery) External Collection Agents Court Action v. Deductions from Housing Benefit payable to that landlord when they are themselves entitled to Housing Benefit 1.20 Where debtors are pursuing personal insolvency, for example bankruptcy or a Debt Relief Order (DRO), those cases will be dealt with following the prevailing case law and regulations. Cases where the debtor has a debt which is the result of proven fraud will be excluded from any bankruptcies and DROs.

20 1.21 Where debtors are the subject of an Individual Voluntary Arrangement (IVA) the council will attempt to protect the Local Taxpayers interests and will actively seek to have debts excluded from IVAs wherever possible In cases where the debtor is deceased, recovery will be sought from the estate, except when the debtor has died intestate. The advice of an independent insolvency practitioner may be sought in some circumstances to determine whether the Council might be able recover funds it would not ordinarily be able to do When debtors are in prison overpayments will be held in abeyance until release. If the prison sentence is lengthy, the debt will be written off (subject to the correct procedures), and then reinstated at a later date, if appropriate For debts where the debtor s whereabouts are unknown, efforts will be made to trace the debtor. The level of effort will depend on the amount and age of the debt. External tracing agents may be used where appropriate After applying the various procedures outlined any overpayments that are irrecoverable will be written off as per Section 7 of the Corporate Debt Policy.

21 APPENDIX 3 SUNDRY DEBT RECOVERY POLICY INTRODUCTION 1.1 The Accounts Receivable Section is responsible for the collection of a broad range of debts which include: - Accident damage Accountancy support Advertising costs Commercial recycling Commercial rents Harbour Dues and Harbour related charges Hire of leisure facilities and rooms at council community centres Homeless Prevention Loans Home Improvement Agency works Insurance Legal Services support Local Authority Land Search fees Lottery Licence fees Market rents Parking permits Premises licence fees Retrospective rebate charges Section 106 charges Service charges Trade refuse collections Veterinary fees Water sampling costs Works undertaken (both by request and following notice) 1.2 Some of these debts are governed by statute, for example, licences, whilst others are governed by civil debt procedures. 1.3 The Accounts Receivable Section deal with the recovery and collection of the debts but Service areas within the Council are responsible for raising the charges / invoices initially. 1.4 Service Areas are also responsible for issuing credit notes where applicable and corresponding with debtors in regards to disputes or queries relating to the validity of the debt. 1.5 Service Unit Managers are responsible for being aware of the level of outstanding invoices for their service area, as part of their budgetary management. All sundry debts that are written off will be written off against the income code against which they were raised therefore this has a direct impact on a Service Area s budget. POLICY AIMS 1.6 The Recovery policy will ensure that:

22 The Council will bill, collect and recover sundry debt invoices in an economic, effective and efficient manner in accordance with legislation (where available) and best practice. All debtors are treated fairly and objectively and that procedures are applied consistently. Action taken will be fair and open, no-one will receive less favourable treatment because of their race, nationality, colour, ethnic or national origin, religious beliefs, gender, marital status, sexual orientation, age or disability POLICY 1.7 All invoices will be accurate in detail, and will include the full name and address of the debtor and should only be raised in the name of the legal entity (see definitions). Full details of the goods or services provided, including the dates that the works were undertaken or services provided, will be included on the invoice. 1.8 Service Unit Managers will ensure that a clear management trail is kept of all invoices and credit notes, including the retention of relevant information. Supporting evidence relating to all invoices (and credit notes) should be retained for future reference for a period of six years plus the current year. Where applicable a purchase order will be shown on the invoice. 1.9 Where possible, invoices will be issued within seven working days of the work or service being completed The Council will endeavour not to raise ad-hoc invoices with a value of less than The only exceptions are the raising of petty rents, ground rents, lotteries and amusement licences or where there is a statutory requirement to do so. It is uneconomic to raise low value invoices due to the administrative costs involved and recovery of such invoices is impracticable since it would be inappropriate to pursue such low costs through the Court To reduce the risk of non-payment to the Council, a credit check (for companies) will be undertaken where goods and / or services are being provided that cost (or could accumulate to cost) 5,000 or more. The only exceptions are other Local Authorities, government departments, public bodies and companies which have previously had and met such credit terms, within the previous six months. Internal checks on individuals will be undertaken when appropriate. Credit checks and other internal checks will be undertaken by the AR Section at the request of a Service Area Goods or services will not be supplied to those debtors who have previously been consistent late payers or who have not paid at all. (The only exception would be where there is a statutory requirement to do so). Service areas must check the Council s financial system before offering the debtor a service or providing them with goods. This will determine whether the debtor owes any monies and will also provide useful information regarding the debtor s payment history A legally binding signed agreement should exist between the Council and the debtor:-

23 Where the debtor has made a request for goods or services (including but not exclusively, for the provision of insurance through a third party, the use of harbour facilities, the hire of the indoor pool etc.) Where the debtor has agreed to make a contribution and consideration is present (see definitions) Where the debtor has agreed to sponsor an event, floral display or other area for the purpose of advertising Where the debtor is a tenant of the Council and is charged commercial rent and associated charges such as service charges and insurance premiums Where the debtor is a leaseholder and is charged for the maintenance of communal areas (service charges) The period of the agreement should be clearly stated in the legal agreement The Council will rigorously pursue debtors, and will avoid entering into contracts with persons or organisations that are likely to become bad debtors. Where it is known that an individual, company or organisation has a poor payment history the Council should not engage in any form of business with those prospective debtors Where an invoice needs to be raised, the Council s standard terms for payment apply, unless otherwise stated. The council s standard terms are 14 days. Invoices and reminders will be issued as follows: - Day 1 Invoice issued requiring payment within 14 days Day 21 First reminder issued Day 31 Second reminder issued 1.16 If an invoice remains unpaid after the issue of two reminders the Accounts Receivable Section will decide how to progress the case. This will generally follow the Council s recovery strategy (an internal operational document) but the next course of action will depend on the level of debt, the information that is known about the debtor (including their ability to pay), the nature of the outstanding charge and the total indebtedness to the authority. Where necessary, discussions will take place with the service area and an agreement will be reached regarding how to progress the case The services where the standard terms and recovery cycles vary from the norm are: Licensing (Lotteries and Amusement and Premises) Terms and recovery procedures will be in accordance with prevailing legislation. Property Services (commercial rents) Terms and recovery procedures will be in accordance with the terms of individuals agreements, invoices will be issued in advance of the due date to encourage prompt payment. Following the issue of an invoice and two reminders, pro-active action will be taken against debtors. Such action may include referral of the case to Legal Services and termination of a lease or license. Weekly reports of overdue invoices are circulated to the Council s Property Services Section. There is close liaison between members of

24 the Accounts Receivable Section and Property Services team to discuss problematic cases and agree appropriate courses of action. Contribution or Sponsorship - Invoices for contribution or sponsorship will not be pursued in the normal manner and standard reminders will not be issued. It is deemed inappropriate to threaten court action for these types of invoices. Although standard reminders will not be issued, the charge should be supported by an agreement signed by a contributor/sponsor. In the event of non-payment the Accounts Receivable team will liaise with the service area to discuss how to progress the case. Retrospective rebates An invoice will be raised annually to suppliers that are on the Council framework agreement. The charge will reflect 1% of the amount that is spent through the framework each financial year. The invoice will allow the standard terms of 14 days for payment. If the invoice is not paid directly, Clause 18.1 Recovery of sums due of the contract allows the Council to offset any payments due to be made to the supplier against any sums owed The actions available to recover outstanding sundry debts include: - i. Referral to an External Collection Agent ii. iii. Telephoning, ing and corresponding with the debtor Progression to Legal Services for recovery through the County Court Where legal action is considered appropriate, the Transactional Finance Manager will seek approval from the relevant Service Unit Manager to ensure that they are in agreement and that appropriate supporting documentation exists. The Service Unit Manager will be required to sign a referral form, indicating that their Service Area will bear any costs associated with issuing proceedings through the County Court or instigating insolvency action. iv. Legal action can (in some limited circumstances) be undertaken by the Accounts Receivable Section v. Bankruptcy and Insolvency vi. Arresting of Boats Should a vessel in the harbour refuse to pay their dues, the vessel can be arrested with the agreement of the Harbour Master, Portfolio Holder for Harbours and the Accounts Receivable Section. The Collector of Dues has the power of arrest under the Harbours, Docks and Piers Clauses Act 1847 clause Where recovery action is being taken against a debtor the Council will determine whether it is appropriate to terminate the debtor s agreement and cease providing the services covered by the agreement Where a dispute or query remains unresolved and there is little or no evidence to demonstrate that positive efforts are being made by the Service Area to resolve the dispute then the debt will be written-off as per Section 7 of the Corporate Debt Policy.

25 DEFINITIONS 1.21 Ad hoc invoice This is a one off charge to the debtor rather than a recurring charge Debt-raising service A service within the council that raises sundry invoices Legal Entity - Any individual, proprietorship, partnership, corporation, association, or other organization that has, in the eyes of the law, the capacity to make a contract or an agreement, and the ability to assume obligations and to incur and pay debts. A legal entity can sue and be sued in its own right, and can be held responsible for its actions. For example, Smith Properties is a trading name of Mr Smith. Mr Smith is the legal entity, not Smith Properties. Smith Properties Ltd is a legal entity but not Smith Properties Legally binding signed agreement In this definition the term agreement can relate to an agreement, a contract, a lease or any other form of signed document in which parties agree to certain actions or inactions. A legally binding agreement is one in which two or more parties agree to certain provisions that each party must follow. The signing of the agreement represents the fact that certain actions are now either required or prohibited. Failure to adhere to the provisions of an agreement can void the agreement or allow one of the parties to take legal action against the other party In order to be binding on the parties, the agreement must be signed by the parties and there must be adequate consideration. In this instance consideration is the principle that something of value must be put into the contract by both parties. Unless both parties (or all parties if more than one) contribute to a contract in a way that can have value attached to it, the contract will not be binding. For example, a contracting party can promise payment for a service or promise to carry out an act or provide a service in return for payment. Without each party making some sort of commitment to the contract that has attributable value (consideration) a contract will not be formed and will not be enforceable.

26 APPENDIX 4 PARKING ENFORCEMENT RECOVERY POLICY A Penalty Charge Notice must follow the following statutory recovery process: A Penalty Charge Notice is issued by a Civil Enforcement Officer and either affixed to the windscreen or handed to the driver. If this is not possible, because the vehicle drove away or the Civil Enforcement Officer was threatened, then the Penalty Charge Notice may be sent by post. The charge must be paid within 28 days from the date of issue of the Penalty Charge Notice. If the charge is paid within 14 days, a discount of 50% is offered and the case is closed. Drivers who receive a Penalty Charge Notice and wish to query the issue with the Council may write in to the address shown on the back of the Penalty Charge Notice. If a driver does so, no further action will be taken until the matter has been considered and a reply sent. If the driver writes within the 14 day period allowed for payment of the discount, and the Penalty Charge Notice is not cancelled, a further 14 days will be allowed for payment of the discounted amount. If the charge is not paid within the 28 day period a Notice to Owner is issued to the registered keeper of the vehicle. This gives the keeper the opportunity to either pay the charge, or make formal representations. The Council will consider all representations received and issue either a Notice of Acceptance or Rejection of Representations. If representations are rejected, the vehicle owner will be allowed to appeal to the Traffic Penalty Tribunal, an independent appeals body. An adjudicator will consider the case and make a decision that is binding on both the Council and the appellant. If no representations are made, or representations are made and rejected by the Council, or an appeal is made subsequently to rejected representations and refused by the Traffic Penalty Tribunal and no payment is then received within 28 working days, a Charge Certificate is issued. This increases the charge by 50%. If payment is not made within 14 working days of receipt of the Charge Certificate, the Council will apply to the Traffic Enforcement Court to register the charge as a civil debt. The Traffic Enforcement Court is a special court which only deals with civil traffic contraventions. The Traffic Enforcement Court will then authorise the Council to issue a Notice of Unpaid Penalty Charge, which increases the outstanding charge by 7.00 (as Court fees are added to the amount payable). On receipt of the Notice of Unpaid Penalty Charge, either payment of the full amount due must be made, or a Witness Statement may be submitted to the Court on certain grounds (this is explained in the Notice of Unpaid Penalty Charge), If payment is not made within 21 days of the receipt of this Notice an application is made to the Traffic Enforcement Court for a Warrant to be issued to recover the debt.

27 The Traffic Enforcement Court then authorise the Council to issue a Warrant of Control. This is valid for one year and a day and is passed to a Certified Enforcement Agent. The Enforcement Agent is appointed by a Court and will add his charges to the outstanding debt. These are strictly controlled by the Department for Justice as are the actions he can take to recover the debt. After the Warrant of Control is issued, no correspondence or communication will be dealt with by the Council. These can only be directed to the Enforcement Agent.

28 APPENDIX 5 INTRODUCTION COLLECTION COSTS AND FEES POLICY 1.1 Considerable costs are incurred to recover sums due from defaulting council taxpayers and non-domestic ratepayers. The Council Tax (Administration and Enforcement) Regulations 1992 (as amended) and the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (as amended) empower the Council to recover reasonable costs from defaulters with the approval of the Courts. 1.2 Costs are also incurred taking legal action for overpaid Housing Benefit and Sundry Debts. Costs are determined by the courts. POLICY AIMS 1.2 The collection costs and fees policy will: Provide a uniform scale of costs applicable at each recovery stage. Ensure that the level of costs is reasonable. POLICY 1.3 The following scale of costs is applicable with effect from 1st April Liability Orders and Committal Proceedings Recovery Stage Council Costs Court Costs Total Cost to Debtor Court Summons Liability Order Nil Committal Summons/Warrant of Commitment Warrant backed by bail Warrant not backed by bail NOTE: Arrest warrants executed by the Council s agents will be subject to a charge to the Council at different rates, depending on the agents scale of charges and the location where the warrant is executed. Typical fees are: Executing a warrant backed by bail VAT Executing a warrant not backed by bail VAT

29 There may be instances where more than one warrant is required. This will affect the balance shown as collectable Legal Costs For Housing Benefit Overpayments and Sundry Debts In all cases legal costs incurred by the council are added to the debt and the debtor is required to repay the costs in addition to their debt. The main types of legal action and the associated costs are shown below: - Type of Cost (Recovery Stage Cost ( ) County Court Judgment for HB County Court Judgment for Sundry Debts Scale of fees dependant on the value of the debt Attachment of Earnings Order Warrant of Control * Third Party Debt Order Order to Obtain Information from a debtor Request for the Court to serve papers *If the debt is greater than 5000 then it must be referred to the High Court. The High Court has a different fee system which varies dependant on the amount of the debt. In all cases the actual fee charged will be passed on to the debtor Costs For Service of Documents In some instances the courts require that documents are served personally. In these instances the actual cost will be charged Bankruptcy Proceedings The petitioning creditor s costs associated with bankruptcy proceedings are: Fixed Costs (in accordance with the statutory scale of fees and charges currently in force, which may change) Court Fee payable on filing of petition (non-refundable) Official Receiver s Deposit payable on filing of petition (refundable if petition is withdrawn or dismissed) Variable Costs (will be actual costs incurred and will be claimed in the bankruptcy indicative costs below) Expense in relation to preparation and service of Statutory Demand and preparation of Certificate of Service Expense in relation to preparation and filing of Petition and Statement of

30 Truth Expense in relation to the Personal Service of the Petition Expense in relation to preparation and filing of Certificate of Service Expense in relation to preparation of papers for and attendance at Petition Hearing. Variable Actual costs incurred for additional matters, e.g. Counsel s opinion, additional legal representation, attendance at additional hearings etc All costs may be claimed in the bankruptcy Charging Orders Fixed Costs associated with Charging Orders are levied in accordance with the statutory scale of fees and charges currently in force. They are currently: Application Fee Land Registry Registration Fee 4.00 Cost of Office Copy of Land Registry Entry Fixed costs that may be awarded by the Court All costs are included in the Final Charging Order. Council costs will be reviewed annually in line with budget. The Council has no discretion in the level of Court costs which are governed by legislation.

31 APPENDIX 6 BANKRUPTCY POLICY Purpose of document 1.1 This policy covers debts owed to the Council. Those debts include Council Tax, Business Rates, sundry debts and Housing Benefit overpayments. The Council is committed to using the most effective recovery methods available to it, and this policy will ensure that the Council s use of bankruptcy is consistent and complies with the relevant legislation and best practice. 1.2 Legislation and Prerequisites to Bankruptcy The Council Tax (Administration and Enforcement) Regulations 1992 and the Non- Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 allow for Council Tax and Business Rate debts of over 750, that are the subject of liability orders, to be taken forward for bankruptcy proceedings in accordance with the provisions of the Insolvency Act For sundry debts and Housing Benefit overpayments bankruptcy proceedings may be taken against debtors who owe in excess of 750 where a County Court Judgement has been granted in respect of the debt The consequences of bankruptcy can be severe and can involve the loss of the debtor s home or business, and considerable legal and Trustee s costs can be incurred. The level of costs will reflect the complexity of the matters involved, and the extent to which the debtor co-operates with the Trustee who is administering the bankruptcy estate Bankruptcy action takes place in the debtor s local County Court with bankruptcy jurisdiction unless the debtor resides in London, in which case the action takes place in the High Court or the Central London County Court. 1.3 Administration The Local Taxation service will manage the administration of bankruptcy cases and proceedings for Council Tax and Business Rates though all cases identified will be reviewed and risk assessed internally and assessed by a legal professional specialising in this area of debt collection. Accounts Receivable will manage the administration of bankruptcy cases and proceedings for sundry debts and Housing Benefit overpayments though all cases identified will be reviewed and risk assessed internally and assessed by a legal professional specialising in this area of debt collection. 1.4 When Bankruptcy Action may be taken The Council may consider using insolvency proceedings in the following circumstances (the list is not exhaustive): Where the debt exceeds 750 and the debtor appears to have sufficient assets or equity to ensure the debt is recoverable by the Official Receiver or the Trustee in Bankruptcy.