Policy and Procedures for the Recovery of Council tax and Business Rates

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1 Scope and Purpose of this Policy Policy and Procedures for the Recovery of Council tax and Business Rates 1 The purpose is to establish a policy to ensure consistency, equality and probity in the collection of council tax and business rates in line with the regulations detailed below and with recognised best practice: Local Government Finance Act 1992; Council Tax (Administration and Enforcement) Regulations 1992, as amended; Non Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989, as amended Magistrates Court Act 1980, as amended The Tribunals, Courts and Enforcement Act 2007 The Taking Control of Goods Regulations 2013 The Taking Control of Goods Regulations (Fees) This policy applies to council tax and NNDR (business rates) debtors which in this context is any body (whether an individual or organisation) who is liable for a statutory debt, and has not yet paid the full amount owed. 1.2 This policy does not cover sundry debts such as Commercial debts covering invoices raised for rents, insurance, service charges, way-leaves, licences, clinical and trade waste collection Domestic debts covering invoices raised for insurance, building regulations, cesspool clearance, special collections, sundry environmental health charges Housing benefit overpayments including fraud cases Fees and recharges such as building regulations, abandoned vehicle fees, rechargeable repairs and works undertaken in default. Personal debts covering invoices for community care services, sports and leisure bookings, salary overpayments and the recovery of training expenses. Former tenant rent arrears arising prior to large scale voluntary transfer of housing stock and rent deposit loans raised under the private rented assistance scheme. Penalty notices raised for parking and other environmental offences Housing benefit overpayments which are being deducted from ongoing benefit Some miscellaneous services, which are charged in advance such as pest control, refuse sack sales. Overview 2.0 The Council has both a statutory and fiduciary duty to ensure that all money owed is promptly collected whenever possible. However, the Council has to balance the level of enforcement undertaken to collect the debt against the value of the original debt and Created on 21/08/ :40:00 Page 1 of 10 R:\Revenues and Exchequer\Revenues Recovery Policy Document updated Aug 2014.doc

2 the circumstances of the debtor to ensure that all actions taken are reasonable, lawful, appropriate and economic. 2.1 Where collection of the debt is impossible, impractical or uneconomic, debts should be written off with the minimum delay, in line with established accountancy practice, and the Council s financial regulations. 2.2 In practice the feasibility of collecting a debt is influenced by many factors including; the amount of the debt, the type of debt, the whereabouts of the debtor, the assets held or employment status of the debtor, the age of the debt and the debtor s circumstances. In view of this wide range of factors this policy can only seek to establish an outline of the process to be followed in collecting each type of debt. In reaching a decision on the appropriate action in each individual case the authorised officers must also exercise their professional judgment. 2.3 The actions and time scales to be followed are laid down in the regulations. Requirements 3.0 To comply with this policy, the administrative teams concerned shall in all cases: a) Raise bills which are clear and correctly addressed using the debtor s legal title. b) Only raise bills as specified within the legislation and bear scrutiny. c) Attend to all debts raised in a timely manner. d) Respond to each debtor promptly using an equivalent method of communication, i.e. telephone, , face to face or in writing. e) Treat all debtors equally, without bias. f) Respond to debtors following the Council s customer care guidelines. g) Listen to the debtor and ensure that all queries raised are addressed promptly. h) Ensure a record is maintained of all communications with each debtor. i) Take care to ensure that correspondence is correctly addressed and actions are clearly explained without the use of jargon. j) Ensure that debtors with disabilities or language barriers are catered for appropriately. k) Take action to locate debtors who have absconded. l) Apply receipts promptly and in accordance with the debtor s instruction. m) Investigate receipts that are unallocated and held on a suspense account. n) Ensure each action taken is appropriately authorised, recorded and that supporting evidence and all documentation is maintained. o) Adhere to the Council s financial regulations when passing debts for write off. 3.1 The Head of Revenues and Exchequer is responsible for ensuring the above administrative requirements are fulfilled at all times. Procedures and Limits 2 of 10

3 4.0 The recovery process for council tax and business rates is laid out in the two flowcharts below. The first reflects the stages undertaken by the Registration, Billing and Collection Team; from bill to a summons in the Magistrates Court. The second shows the options available to the Recovery Team when dealing with post summons debt. 4.1 Council tax and business rates are billed annually on 1 st April each year and customers have the right to pay over 10 or 12 monthly instalments. They may also opt to pay annually, half yearly or quarterly. If a customer moves into a property during a billing year then they are billed from the start date and the instalments are adjusted accordingly. Billing to Summons Bills are served on all liable parties in a timely manner with details of instalments. Payment received to the agreed instalment schedule. No further action. First reminder letters are issued to all parties where an instalment is not paid by the due date. Payment(s) received and instalments brought up to date. No further action. Where a customer defaults for a second time during a tax year a second reminder will be issued. No more than 2 reminders are issued in one tax year. Payment(s) received and instalments brought up to date. No further action. Final Notice is issued withdrawing the debtor s right to pay in instalments and demanding the balance of tax due for the year. Payment received for the balance of tax due for the year. No further action. A summons is issued for the debtor to attend the next hearing in the Magistrates Court. Court fees are added to the account. TRACING If any of the above correspondence is returned a trace is carried out. 3 of 10

4 Post Summons A summons is issued 14 days before the court hearing (plus 4 days to allow for postage). Payment received for the full summonsed amount prior to the court date. No further action. At the Magistrates Court Hearing the Council apply for a Liability Order. Court fees are added to the account. The customer attends court and makes an arrangement with the Council s officers. Payment arrangement confirmed and monitored.. A Liability Order is awarded to the Council Debtor defaults on arrangement A Request for Information is sent as set out in Regulation 36. The debtor is advised that a Liability Order has been granted and they are required to supply details of their employment, earnings, usual payroll deductions and any other sources of income. This request must be made in writing and gives the debtor 14 days to respond. Failure to supply the information requested without a reasonable excuse is a criminal offence. Details of the three stages of collection taken by enforcement agent and the associated fees are included. The Council has the following options and can use multiple options at different times for the same debt:- Passed to an external certificated bailiff If the above letter is not returned or is incomplete the case will be passed to an enforcement agent for collection. The enforcement agent company will charge fees to the debtor. Nula Bona Certificate A nula bona certificate is issued where the enforcement agent has been unable to find goods of sufficient value belonging to the debtor. Committal Proceedings Attachment of Earnings If the debtor is employed an attachment of earnings will sent to the employers. The level of salary deductions are a set percentage of earnings as shown via the link, R:\Exchequer\AOE booklet Aug 2007.doc. If an employer fails to comply they can be prosecuted and fined. External Recovery Officer Attachment of Benefit If the debtor is in receipt of Job seekers Allowance, Income Support or Employment Support Allowance a prescribed amount can be deducted. The Council apply to the appropriate DWP office and payment is received directly. A Council officer calls on debtors who have not responded to correspondence. Any previously unknown issues can be raised and resolved, debtors can be located and arrangements made to pay. Bankruptcy Charge on property Only appropriate if the debtor owns a property. A Land Registry search would be undertaken to establish legal title. The Legal section would make an application via the County Court The Council can apply for either bankruptcy, insolvency or a winding-up order. External specialists would be employed for this option. 4 of 10

5 At all times, in the above processes, the following information should be considered: The size of the debt The age of the debt The location of the debtor The amount spent on collections compared with the value of the debt The debtor s circumstances and ability to pay 4.2 The table below details the period between actions which allows the debtor sufficient time to respond to the previous request. Action Time from previous action Bill First reminder Second reminder Final Notice Summons Liability Order Request for Information Produced annually 14 days prior to due date of 1 st April or when the liability changes for a property or hereditament. Reminders are produced weekly each Tuesday for all accounts which have fallen due in the preceding week. To be send if an account which has been brought up to date once falls into arrears the second time within the same tax year. The second reminder is issued on the same basis as the first. This is produced 14 days after a reminder has been issued where the instalments have not been brought up to date. This notifies the debtor that they have lost the right to pay by instalments and of the full balance due. This is issued 7 days from the Final Notice. The debtor is notified of the amount due, the addition of 40 in court fees and given 18 days notice of the date of the hearing in the Magistrates Court this is the statutory 14 days notice and 4 day allowance for postage. The Council apply for a Liability Order at the Magistrates Court hearing. The liability order will be granted if the Council have produced the bills and required reminders in accordance with the legislation. Following the Court hearing the Council write to the debtors advising them that a liability order has been granted and that further costs of 40 have been added to the debt. A form is included requesting information as required under Regulation 36 together with details of the three stages of collection taken by enforcement agent and the associated fees. On receipt of a response to the Request for Information or after 14 days the Recovery section select the most appropriate enforcement action as detailed above. Pass for trace The case details will be logged with the on-line trace system if previous paperwork is returned or there is other evidence that the debtor is not at the billing or correspondence addresses. 5 of 10

6 4.3 The following table sets out the level of debt below which it is considered uneconomic or inappropriate to carry out the specified action. The levels suggested are measured in terms of balance i.e. value of debt versus strength of recovery action and value of debt versus cost of recovery action. These levels will be reviewed annually or if the cost of taking action (i.e. administration costs or court fees) changes. Action Lowest value of debt External cost of action Notes Issue of automated reminder letters Referral of debt to the external recovery officer within the borough Referral of debt to the external recovery officer outside the borough* Minimum instalment agreed under an arrangement to pay (per week)** See below Referral of cases for trace cost per successful search Issuing of a Summons in North and East Hertfordshire Magistrates Court claim and to apply for a Liability Order. Post Liability Order enforcement options: Court fee paid ( 40 recovered from the customer) Referral of debt to an enforcement agent Compliance stage Enforcement stage*** Sale and Disposal *** Enforcement Agent s fees are collected from the debtor Attachment of earnings Attachment to benefits Charge on property via the County Court 1, Force sale of a property under a charge 5, Court fee stated plus solicitor s fees Plus additional solicitor s fees Committal proceedings 1, Court fee * The external recovery officer will only make visits within the borough or in neighbouring boroughs due to travelling time. The officers safety is paramount and some areas are considered unsuitable for a lone officer to attend. ** This sum is based on the benefit regulations which in certain circumstance allow for a deduction of 3.65 per week to be made *** The fees are increased by 7.5% of the sum to be collected for amounts over 1,500 6 of 10

7 Arrangements 5.0 Where a debtor makes contact at any point in the recovery process the Council will consider making an arrangement to pay where it would be unreasonable to expect full settlement due to the debtor s circumstances. Regular instalments will be accepted weekly or monthly with payment by direct debit being the preferred method. The aim is to collect all tax debts within the year the liability falls. All arrangements will be confirmed in writing and monitored. Where a debtor defaults on an arrangement the Recovery team will move the debt forward without further reference to the debtor. Approved reasons for write off of debts (See Appendix A) 6.0 The following are recognised as valid reasons for the write off of debts. a) The debtor is deceased and has left no estate or traceable executors. b) The debtor is formally insolvent. c) The debtor has absconded and cannot be traced. d) The amount is below the limits set out above for enforcement and action to date has proved unsuccessful. e) The debtor is living outside the UK and is unlikely to return. f) The debtor is living in Scotland or Northern Ireland and it is uneconomic to transfer proceedings to the appropriate court. g) The debtor is serving a prison sentence of sufficient length to make recovery unlikely. h) The debtor is sectioned under the mental health act or undergoing a drugs rehabilitation programme of sufficient length to make recovery unlikely. i) It is in the Council s interest to agree a negotiated settlement for part of the debt, the balance therefore is deemed uncollectible. j) The Court has not made an order in the Council s favour at a hearing. k) If having review the debtor s financial investigation form it is considered that to enforce payment would cause the debtor extreme hardship, financial or otherwise, or it is in the interests of the Council or the wider community to write off the debt. l) The age of the debt precludes recovery, or the debt is Statute Barred. 6.1 Debts will be written back and recovery action will recommence if the debtor s is traced or their circumstances change sufficiently to make this action reasonable. 6.2 A distinction must be drawn between court fees, solicitor s costs and statutory interest which are withdrawn because they were charged incorrectly and court fees, solicitor s costs and statutory interest which are written off because they are considered to be irrecoverable under the guidance of this policy. Where the costs are incorrectly applied then these will be withdrawn outside the area covered by this policy. Where costs are considered as irrecoverable they shall be treated in the same manner as the original debts for the purpose of this policy. 7 of 10

8 Approved reason for writing on credit balances 7.0 The credit has remained unclaimed for a period of six months and the customer cannot be located. Involvement of Advice Agencies and other Stakeholders 8.0 The Council recognises the valuable role of local advice agencies in providing assisting to local residents experiencing difficulty in managing debt. The Council have therefore consulted the local Citizens Advice Bureau and Hertfordshire County Council s Money Management Unit on the content of the policy. 8 of 10

9 Appendix A Guidelines to categories of write offs listed in Section 6 of this policy a) The debtor is deceased and has left no estate or traceable executors Where the executor or next of kin has shown to the Council s satisfaction that the deceased has left no estate with which to discharge the debt, the amount is put for write off. Where the estate is sufficient to pay only part of the debt the balance is proposed for write off. Where no executors can be traced any credit due is allocated to any other outstanding debt the debtor has or written on if there are none. b) The debtor is formally insolvent Where the debtor has entered into formal insolvency the full balance of the debt shall be written off. However, in all cases a claim is submitted in the insolvency and where a dividend is paid the appropriate amount is written back onto the debtor s account. Formal insolvency is defined as being subject to: Compulsory, creditors voluntary, or members voluntary, liquidation Bankruptcy An individual, corporate or partnership voluntary arrangement Administrative receivership Administration by the High Court Granting of an administration or composition order by the High Court or County Court An insolvent partnership order Note; the debts are only written off where all liable persons, companies, partnerships or partners are formally insolvent. c) The debtor has absconded and cannot be traced All reasonable steps, appropriate to the amount of the debt or credit, are taken to establish the debtor s whereabouts before the debt / credit is written off. d) It is uneconomical to take action to enforce payment Debts are written off where it can clearly be demonstrated that: i) The cost of enforcing payment will exceed the amount expected to be collected ii) The likelihood of enforcement action being successful is low and there is a clear risk that the costs incurred in enforcement action will not be recovered. 9 of 10

10 The policy states the appropriate level of debt for enforcement action. e) The debtor is living outside the UK and is unlikely to return Where it can be demonstrated that the debtor is living outside the UK and is unlikely to return, the debt would be proposed for write off. If it is known that the debtor has identifiable assets in the UK i.e. property, then legal action would be taken to secure these assets where this is feasible. In the case of credits that have been unclaimed for more than six months, reasonable measures will be taken to establish the whereabouts of the debtor whether at home or abroad. f) The debtor is serving a prison sentence of sufficient length to make recovery unlikely. The length of a prison sentence is not always known and the debtor does not always return to this area on release. It is often difficult for ex-prisoners to secure work and therefore recovery of previous debts is unlikely. Each case needs to be viewed separately but an assessment would be made given the detail available. g) The debtor is sectioned under the mental health act or undergoing a drugs rehabilitation programme of sufficient length to make recovery unlikely. Similarly to (h) the periods of treatment are not always known. Disruption is caused to the debtor s life, their ability to maintain accommodation, gain employment and so settle their debts. Each case needs to be viewed separately but an assessment should be made given the detail available. h) The credit has remained unclaimed for a period of 6 months and the customer cannot be located Where efforts have been made to trace the customer but have been unsuccessful and a period of six months has elapsed since the credit arose. 10 of 10