Oadby and Wigston Borough Council CORPORATE DEBT POLICY

Transcription

1 Oadby and Wigston Borough Council CORPORATE DEBT POLICY September 2012 If you require this document in a different format please contact, Customer Services on Leicester (0116) or us at [email protected] Version: 2.9 September 2012

2 Version Revision Date Summary 1.0 September 2007 Original policy 2.0 August 2012 Policy refresh 2.1 August 2012 Comments from Jacky Griffith and David Coe incorporated 2.2 August 2012 Comments from Kalv Garcha incorporated 2.3 August 2012 Comments from Kat Bennett incorporated 2.4 August 2012 Comments from Sean Dykes incorporated 2.5 August 2012 Comments from Anita Pathak Mould incorporated. 2.6 August 2012 Comments from Ian Anderson and Sean Dykes incorporated. 2.7 August 2012 Comments from Julie Crowshaw incorporated 2.8 September 2012 Changes made to style and layout 2.9 September 2012 Comments from Paul Fitzgerald incorporated Contents 1. Introduction 2 2. Policy purpose and aims 2 3. The primary regulations governing debt collection 2 4. Links to other policies 3 5. Extent of the policy 3 6. Fees and charges 3 7. Recovery of debts 4 8. Raising debts 4 9. VAT Communicating with Customers Debt repayment Late and unpaid debts Multiple debts Tracing Advice and assistance Enforcement action Vulnerability Priority debts Complaints Monitoring of debts Training and compliance Write offs Bailiffs 11 Procedural Appendices A. Council Tax 12 B. Business Rates 26 C. Housing Benefit Overpayments 29 D. Rent 33 E. Former Tenant Arrears 38 F. Sundry Debts 48 1

3 1. Introduction 1.1. OWBC levies charges for a variety or services and is responsible for collection of local taxes. Whilst the majority of income is collected in a routine manner, unpaid charges and debts do arise for a variety of reasons. This document sets out the principles that it expects all staff to follow in the recovery and enforcement of debts in a firm but fair manner. 2. Policy purpose and aims 2.1. The aims of this policy are to: Ensure a professional, consistent and timely approach to debt recovery action across all Council functions; Help minimise debts to the Council and improve income levels; Promote a co-ordinated approach to sharing debtor information and managing multiple debts owed to the Council; Ensure that individual and exceptional circumstances are given due consideration when pursuing debts particularly in relation to vulnerability; Ensure that debts are managed in accordance with legislative provisions and best practice; and Treat individuals consistently and fairly, regardless of age, sex, gender, disability and sexual orientation and to ensure that individual s rights under data protection and human rights legislation are protected. 3. The primary regulations governing debt collection 3.1. The Local Government Act 2003; 3.2. The Local Government Finance Act 1992; 3.3. The Council Tax (Administration and Enforcement) Regulations 1992; 3.4. The Local Government Finance Act 1988 and the Non Domestic Rating (Collection and Enforcement) (Local lists) Regulations 1989; 3.5. The Civil Procedures Rules 1999; 3.6. The Distress for Rent Rules 1998; 3.7. The Insolvency Act 2000; 3.8. Housing Benefit Regulations 2006; and 3.9. Housing Benefit (State Pension Credit) Regulations

4 4. Links to other policies 4.1. This policy must be read in conjunction with relevant areas of the following Council policies and procedures (this list is not exhaustive): Financial Regulations; Fees and Charges Book for the relevant year; Anti Fraud and Corruption Policy; Complaints Policy; Customer Care Policy; Prosecution Policy and Manual; and Housing and Council Tax Overpayment Policy. 5. Extent of the policy 5.1. Debts with the Council can arise for a variety of reasons - the main types of debt are set out in the table below (the list is not exhaustive): Local taxes; Benefit overpayments; Rent and former tenant arrears; Fines; Fee and charges for services; and Court costs and cost orders The principles in this policy apply to all debts with the Council, irrespective of their source or reason and to the Council officers and any debt recovery agents acting on the Council s behalf. In this way, the Council can ensure that debts are dealt with in a consistent manner However, it is important to note that for certain types of debt, there are specific rules and legislation which govern their collection and enforcement. Officers need to ensure that whilst they ensure that debts are collected in a legally correct manner (and in accordance with any government or professional guidance), they are mindful of the principles within this policy and accommodate these wherever possible. The schedules of procedural appendices to this policy provide officers in specific services with additional guidance in relation to debt recovery in those service areas. 6. Fees and charges 6.1. The Council s main income streams are defined on an annual basis within the fees and charges book. All sundry debts should be raised in line with the charges outlined for the respective financial year. 3

5 7. Recovery of debts 7.1. The Council will levy and seek to recover any and all debts, costs and fees that are legitimately due from a debtor to the Council or its agents. In exceptional cases these balances may be written off or waived. Examples of the circumstances may include: The debtor is deemed to be vulnerable; Where the debt is irrecoverable; Where the debt is not enforceable; Where it is in the interest of the Council to do so; Where the debtor is bankrupt; and Where there is a debt relief order in place Furthermore, the Council will normally seek to suspend the recovery and enforcement of debts in cases where a formal appeal or tribunal has been properly sought by the debtor. However, in relation to local taxes recovery and enforcement action may continue The Council will ensure that decisions and actions taken in relation to debts are properly recorded and retained. Furthermore, the Council will ensure that where significant recovery action is taken (for example bankruptcy) that robust record keeping takes place. 8. Raising debts 8.1. In order to establish liability for debts officers will ensure that the following information is obtained: Full debtor name(s)*; Contact address (or last known address); Charge address (if different); and Phone number It should be noted that in respect of Council Tax is it permissible to send bills to The Council Tax Payer or the Exors of Debtors will always be advised promptly about the existence of any debt, or in line with statutory regulations (where relevant). All invoices will be raised as soon as practicable and will include clear, relevant and full information as to: What the bill / debt is for; When payment is due; How payment should be made; and How to contact the Council in the event of a query Debtors will be encouraged to make prompt contact if they disagree with a bill or have difficulty in making payment on time. 4

6 9. VAT 8.5. Problems and invoice discrepancies that are raised will be resolved as quickly as possible to prevent unnecessary delays in payments and incorrect charges being levied VAT implications should be considered for all debts that are raised. Reference should be made to Notice 749 Local authorities and similar bodies issued by HMRC. Any specific queries relating to VAT should be directed via finance to the Council s Tax Support service provided by RSM Tenon. 10. Communicating with Customers Officers will always deal with debtors in a courteous, firm and fair way. Further guidance is outlined in the Council s Customer Care and Complaints policies Officers will also ensure that information, letters, invoices and reminders provided to customers are presented in line with Council s style guide and are therefore easy to understand and clear in their meaning. 11. Debt repayment The Council has a standard policy to commence recovery action following the standard payment terms of 30 days, excepting provisions outlined in the appendices Where a debtor is not able to repay the debt completely, either immediately or within a reasonable timescale, officers will negotiate and agree an arrangement for repayment over a specific period of time. In such circumstances, a review of the person s income, expenditure and personal circumstances will be made, to help establish the correct level of repayment Where there is an ongoing debt liability (e.g. Council Tax or weekly rent), any arrangement made will normally require payments to be over and above the on-going monthly liability. It is a requirement of these arrangements that future instalments must be paid when due as a condition of the arrangement Where an Officer identifies a case of genuine financial hardship or vulnerability the case should be brought to the attention of the Line Manager or the Head of Service, to determine if the case requires special consideration / exceptional treatment. 5

7 12. Late and unpaid debts Officers will actively promote providing opportunities for debtors to make payments and to reach suitable debt repayment agreements. Officers will ensure that systems are in place to monitor debt recovery and that debtors are advised of the consequences of late or non-payment of debts Where a debt remains unpaid or the debtor is unwilling to cooperate or communicate with the Council, then the Council will act reasonably in taking any enforcement action permitted by law. 13. Multiple debts Officers will check with other services to determine if there are other debts owed to the Council before continuing with recovery action where a debt exceeds 2,000 or where more stringent recovery measures are being considered. Stringent recovery methods include repossession of a home, committal, the use of charging orders or bankruptcy. In these cases officers will: Identify the action being taken by other services against the debtor; Establish which debt should have the greatest priority for repayment; Ensure that repayment plans are realistic, in light of other debts owed to the Council; and Work together to ensure the most effective method of recovery without placing the customer into hardship The order in which debts should be repaid will depend upon the amount involved and the length of time that they have been outstanding. However, priority should be given to debts where there is a court order in place to enforce the debt Priority should always be given to Council Tax arrears and rent arrears over other debts. Where a person has significant Council Tax and rent arrears, officers within the two sections will discuss how repayments should be apportioned or which debt should be repaid first. Officers will stress to debtors the importance of paying priority debts before non-priority debts. 14. Tracing Officers will attempt to trace the person in-house by interrogating the internal systems where correspondence is returned Gone Away or we become aware that a person has absconded,. If these enquiries fail further enquiries can be made using external tracing services. 6

8 14.2. To prevent unnecessary costs being incurred and to ensure only relevant searches are undertaken access to these services will be controlled by Line managers and Heads of Service. 15. Advice and assistance The Council welcomes the involvement and support of welfare and advice agencies in connection with debts due to the Council and recognises the benefits that such agencies can offer, both to the debtor and Council in prioritising repayments to creditors and maximising income for the debtor Officers will encourage debtors to obtain specialist advice and help, which will include providing details of local and national free debt and money advice agencies. Where the potential for a statutory benefit or discount exists in relation to a particular debt, efforts will be made to make the debtor aware of such opportunities and they will be encouraged to apply for these. 16. Enforcement action When considering enforcement action, officers should adhere to the following principles: Action will be proportionate; Action will be consistent; Action will be transparent; Our Action to date; and The amount owed Proportionality allows for a balance to be struck between the potential loss of income to the Council and the costs of compliance Consistency means taking a similar approach in similar circumstances to achieve similar ends. This relates to: The advice given by officers; The use of powers; and The recovery procedures used The Council recognises that consistency does not mean the exact same approach being taken with every case. Officers will need to take into account factors such as: The social circumstances of the debtor including their vulnerability; The debtor s payment history; and The debtor s ability to pay Transparency is important in maintaining public confidence. It means helping people to understand what is expected of them and what they should expect from the Council. It also means being able to clearly explain and justify the reasons for taking any recovery/enforcement action. 7

9 16.6. Our action to date means whether or not the Council has acted properly, for example has it provided the correct information at the right time and to the right person. 17. Equalities The Equality Act 2010 provides the legal framework to combat unlawful discrimination and provides Public Authorities with general and specific duties relating to equality. Oadby and Wigston Borough Council will do its utmost to uphold these duties and will always have due regard for the requirement to: Eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the act; Advance equality of opportunity between persons who share a protected characteristic and persons who do not share it; Foster good relations between persons who share a protected characteristic and persons who do not share it. Delivering services with equality and fairness will increase trust and confidence within our communities, ensuring that we gain the support of the public. Such support will only be achieved if we provide services that are accessible and responsive to the needs of the public. 18. Vulnerability Furthermore, the Council feels that it is important for debtors to communicate their situation confidentially to the Council so that we are able to make fair decisions on a case by case basis When considering vulnerability officers will consider: Is it reasonable for the person to understand the consequences of the action we are taking; and Is it reasonable for the person to understand the consequences of actions or inaction on their part The reasonable needs of customers will be taken into account and particularly where it is identified that a customer is vulnerable. It is recognised that vulnerable customers may be less able to manage their financial and personal affairs and additional support may be required. Accordingly, vulnerable customers identified will be signposted to appropriate support agencies. Debt recovery action will take account of the vulnerability and circumstances of the debtor, for example, personal visits may be increased, assistance in filling in forms or writing letters may be provided, and liaison will take place with support agencies and services. 8

10 18.4. The Council may recover debts from persons who are vulnerable but it should have regard to acting reasonably in these cases and to the extent and method of recovery action taken. Each case should be considered on its own merits and extra care will be taken by officers to ensure that the individual understands the debt, what is expected in relation to repayment and the consequences of non payment Officers will carefully consider the impact of recovery upon vulnerable persons particularly in relation to any significant recovery methods used including bankruptcy, committal and the use of charging orders. Officers will seek to gather reasonable information in relation to the debtor s vulnerability prior to enforcement action but where information about vulnerability is not available to the Council or where the debtor has not been co-operative this will not prevent the Council from undertaking debt recovery action in a firm but fair manner Where it becomes apparent that a debtor is vulnerable after recovery or enforcement has commenced the Council will review its actions and consider how further recovery should be undertaken. 19. Priority debts Priority debts are those where the Council is permitted to take the strongest legal action against the customer. Priority is not based on the size of the debt or the circumstances of the customer but rather what we as the creditor (or other creditors) are permitted to do to recover outstanding monies. Priority debts are: Council Tax; Mortgage arrears; Rent arrears; Income Tax and VAT; Fines; TV licence fees; Maintenance and child support; Fuel debts; Business Rates; and Hire Purchase for goods that are essential e.g. a car needed for work These debts should be prioritised for recovery from debtors Non-priority debts are: Credit Card and Store Card arrears; Catalogue arrears; Bank overdrafts and loans; Payday loans; 9

11 Hire Purchase for goods that aren t essential e.g. a television; and Money borrowed from family and friends Debtors cannot be imprisoned for not paying non-priority debts. They are unlikely to lose their liberty, home or essential goods if non payment occurs. However, creditors do have the power to enforce these debts at court and this could lead to bailiff action. 20. Complaints If someone is not satisfied with the service provided by the Council or its representatives, then officers will refer to the Council s complaints policy. Where debts are recovered by agents on behalf of the Council these first stage complaints may be addressed by the agents provided this has been agreed within the terms of the contract. In all cases the Council must be made aware of the complaint so that it can be monitored. 10

12 21. Monitoring of debts The profile of debt should be reviewed on a regular basis to ensure the adequacy of the Council s working capital position. Relevant debt profiles should be produced on a quarterly basis as determined by the responsible Head of Service. A profile based on age or stage of recovery may be used as examples A bad debt provision will be made at the year end for the basis of financial reporting to ensure that the value of the Council s debtors is fairly stated. The method for calculating this provision will be agreed with the Head of Finance by 31 st April each year Where a debt is being collected through a sundry debtor account raised by finance, the finance team will routinely monitor the collection. Where instalments are not paid or are paid late, the finance team will notify the relevant Head of Service for advice in relation to further recovery. 22. Training and compliance Each Head of Service will be responsible for ensuring that the policy is adhered to. This will include ensuring that existing and new staff have appropriate training and are fully aware of the content of the policy Compliance against this policy may be tested through reviews undertaken by Internal and External Audit. In these cases, access should be provided to all relevant supporting documentation. 23. Write offs Debts may only be written off in line with financial regulations (reg 19). These stipulate the following write off permissions: Amount Up to 10 Up to 300 Up to 1,000 Up to 5,000 Over 5,000 Authoriser Staff in Customer Services designated by the Director of Resources - up to a maximum of 100 any year Head of Customer Services Head of Finance Head of Communities (in relation to Housing debt only) Director of Resources Director of Resources; and Chair of Finance and Policy Committee Finance and Policy Committee 11

13 24. Bailiffs The Council uses external bailiffs to support its debt collection services. Bailiff services are procured in line with the Council financial regulations. The current bailiff services have been procured through ESPO framework 984LC and have been awarded to Bristow and Sutor although the Council may also use services provided by other approved suppliers on the framework Bailiffs will be instructed to act against debtors who have not made a satisfactory arrangement for payment and have failed to maintain payment plans. Charges will only be levied where permissible by law and as agreed under the terms of the procurement, Service Level Agreement and the Bailiff Code of Conduct When an account has been issued to the bailiffs it becomes their responsibility to collect the outstanding debts (although the Council will continue to monitor the effectiveness of the bailiff services provided on its behalf). Similarly, payments made should go the bailiff for recording on their systems. Any debtor who contacts the department to discuss payment must be told to negotiate with the bailiffs and make payments directly to them Cases must be withdrawn from the bailiffs in the following circumstances, where there: Is a justified dispute in liability; or The instruction to the bailiff was issued in error Cases may be withdrawn from the bailiffs in the following circumstances, where: The debtor has recently been bereaved of a close relative of household member; An attachment order (wages, benefit or allowances) is in effect; The debtor is bankrupt; Recovery of the debt can be affected more effectively through another method; or where The Head of Service or Senior Recovery Officer feels the matter should be withdrawn The performance of the bailiffs will be reviewed at formal review meetings with the account manager. 12

14 Procedural Appendices Appendix A Council Tax Recovery of debt in respect of Council Tax is governed by Council Tax recovery procedures laid down in statute in the Council Tax (Administration & Enforcement) Regulations 1992 and subsequent amendments. External bailiffs are used for the enforcement and recovery of Council Tax debts. The flow charts and notes below provide a summary of the key recovery and enforcement stages. Statute of limitation If the Council has billed in the past, then it is permitted up to 6 years to obtain a liability order. Debts over 6 years old, which have not been summonsed, must be written off. However, if the Council does posses a liability order then there is no time limit in relation to how long it can pursue a debt. Customer care plus In respect of Council Tax, the service provides support to vulnerable customers through its Customer Care Plus option. Customers simply register with the service. Where a customer has taken up this option, the Council can: Provide information in alternative formats Offer home visits Work with customer representatives Provide telephone reminders when payments have been missed 13

15 Council tax recovery policy flow charts and guidance 14

16 Note 1- Billing Demand notices are issued by 17 th March in each financial year to allow for the first instalment to be paid on 1 st April and to ensure the appropriate notice is given under the Direct Debit scheme. Council Tax bills are produced daily throughout the year with instalments calculated in line with legislation. Note 2 Instalment Payment Instalment payments are due on 1 st each month for those paying by all methods other than Direct Debit. The Council has the facility to operate Direct Debit for two dates within the month: 1 st and the 15 th. The law requires that all instalment plans will be over 10 months at the start of the year (though from April 2013) customer may opt for payment over 12 months. Note 3 Reminder Notice A Reminder Notice Reminders can be issued immediately if an instalment is not paid. However, the senior recovery officer will draw up a recovery time table at the start of each financial year. The regulations outlining the requirements for the reminder notice stipulate the following: 1) If a demand has been served by an Authority and instalments due under that notice, in accordance with the instalment scheme, are not complied with, then a first reminder notice shall be served. 15

17 2) The reminder must state: a) The amount of unpaid instalment(s) the time of the notice, this can include any instalments falling due within the next 7 days b) That this amount is due to be paid within fourteen from the issue date of the reminder or the right to pay by instalments will be lost; d) That if a second reminder is issued within the year, (the first issued having been complied with) any further failure to pay any instalment on or before the date it is due, shall result in the right to pay by instalments being lost. These reminder provisions and the recovery provisions following are provided for the recovery of the standard instalment scheme. Note 4 Final Notice Final notices are issued in accordance with the recovery timetable. Provisions relating to the service of a final notice are as follows: No final is required if a first reminder or a second reminder is not complied with within the statutory time limit of 14 days. A final notice is served when Two reminder notices have previously been issued and paid and this is the third occasion in the relevant year that an instalment has not been paid on time, or A reminder Notice has been issued and remains wholly or partly unpaid and an adjustment to the charges has been made such as an amendment to a Discount, Exemption or Benefit. Revenue Officers may withdraw a final notice reinstating instalments where a debtor agrees to pay the balance owed within the year and by direct debit. Note 5 Summons Pre-List A pre-list is prepared following the issue of the reminder notices and /or Final Notice where the sum due under the notice remains unpaid. The purpose of this list is to allow manual scrutiny of potential summons cases to sift any cases where a summons should not be issued. The list should be scrutinised as soon as possible to ensure information is up to date and to avoid the issue of unnecessary summonses. Note 6 Summons Issue Summonses are issued in accordance with the recovery timetable. The Summons is issued, subject to the following rules: 1) A Summons may be issued to two or more taxpayers jointly liable for a debt. Officers will serve each liable person with an individual summons. 2) The summons must be signed, by the JP, or the Clerk to the Court, agreeing the complaint for that particular hearing. A summons at OWBC will be printed with a facsimile of the relevant party s signature after prior 16

18 agreement from the Court regarding the Officer who will be signing the Complaint. 3) A rubber stamp signature is admissible. 4) The Summons must state: (a) The reason for its issue unpaid Council Tax (b) Make reference to the address concerned (c) The Council Tax outstanding together with any amount in respect of costs reasonably incurred (d) The date and time of the hearing. The Summons may be served follows: 1) Delivering it to the person 2) Leaving it at the usual or last known abode of the liable person, or in the case of a limited company, at its registered office 3) Leaving it at or sending it by post to an address given by the liable person as one where service will be accepted. The regulations require the summons to be issued at least 14 days before the date of the liability order hearing. The Council will always allow more than 14 days. The summons is served with the additional of costs as agreed by the court. These costs are set across Leicestershire, Leicester and Rutland under a process overseen by Leicester City Council and approved by the Leicestershire Treasurers. The Council will ensure that cost proposals submitted to the court for approval are fair and reasonable. If the amount due, (plus costs) are paid and notified prior to the date of the hearing the Council will not proceed to obtain a Liability Order. If customers are not able to pay in full prior to the hearing the Council will continue to proceed with the application for a Liability Order. Application for a Liability Order begins with the complaint made by the authority to the Magistrates Court, requesting that a summons be issued to the liable person to show why the sum outstanding has not been paid. Note 7 - Liability Order Application The Court Hearing takes place in accordance with the dates agreed with the Magistrates Court which are detailed on the recovery timetable. An interval of at least 14 days must be allowed between the issue of the summons to the defaulter and the hearing, as a liability order cannot be made unless14 days have elapsed between issue and hearing. The usual practice is to post the summons 21 days before the Hearing. At the Hearing an authorised officer of the Council will make an application to the Court for Liability Orders for a number of cases on the list. The Magistrates will hear the defence of persons wishing to prevent the issue of a Liability Order. 17

19 Note 8 - Arrangements Arrangements can be made at any time after the issue of the summons however this will not stop the Council applying for a Liability order to protect its interest and ensure the debt is paid. Any such arrangements will include costs and will ideally be made using Direct Debit as a payment method. A notification of the arrangement will be issued showing the amounts and dates that payments are due, Where possible all debt should be collected by the end of January/ February of the relevant financial year. However, in exceptional circumstances of hardship/financial difficulty, (demonstrated by the provision of income and expenditure details) it may be possible to extend this further. Approval to extend arrangements rests with the Senior Revenues Officer (Recovery). Note 9 Information Request and Pre Bailiff Letter (14 day letter) Where no arrangement to clear the debt has been made since the issue of the summons the Council will issue notices requiring certain information from the debtor. The notice issued is both a request for information and pre-bailiff warning letter. The notice will indicate the date a liability order was granted, The Amount the liability order was granted for and the amount now outstanding. The letter will request an offer of payment and certain information. By virtue of the liability order the Authority may request the following information from the liable person, which must be supplied within 14 days, provided the information is in their possession or control: The name and address of their employer The amount earned Amounts deducted for Income Tax, N I or Superannuation Any payroll or works reference Other sources of income The letter warns that should the matter be passed to the Council s bailiffs there could be considerable extra costs and the bailiffs can legally take goods to clear the debt and charge for the sale of such goods. A copy of the schedule of bailiff charges (approved by Government) is included with each letter. The letter also contains a further demand for statutory information, to be returned within 14 days, to again allow the Council to consider alternatives to bailiff action. 18

20 The Magistrates Court is able to impose fines for either: The supply of false information (level 3 fine) The failure to supply information (level 2 fine) The Authority would make application for such a fine by laying a complaint to a Justice of the Peace for the issue of a summons. The Authority may ask for other information other than that listed above but there is no compulsion on the debtor to provide it. If this information is not provided or an acceptable arrangement made or accepted in the 14 days the account will pass to the next recovery stage, Note 10 - Failure to make agree an arrangement or provide information Where no arrangement is agreed within 14 days of the issue of the information Request and pre-bailiff letter (see note 9, the Revenues Officer will make a decision on the next stage of recovery from the recovery options shown below. Enforcement Options Arrears Arrangement Set up arrangement to clear the debt (see note 8) Note 11 - Attachment of Earnings Order - Where a debtor is employed then an Attachment of Earnings may be sought. The Authority is able to serve Attachment to Earnings Orders for unpaid Council Tax. If a debtor does not make an arrangement to pay the charges outstanding after the issue of a summons and they had an attachment order the previous year, the Council will set up an attachment order without further notice after the Liability order is granted. These orders act under the following provisions: An order, once served will remain in force until the balance for which it is served is clear, or if the Authority withdraws it. The content of the order is prescribed, as follows: It must be addressed to the debtor s employer It must specify the sum outstanding It must include details of the deduction tables and rules as prescribed in the regulations. It must be signed by the proper Officer of the Authority. The amount is deducted on the basis of the tables contained in the regulations which gives percentages to be applied to net earnings after Income Tax, NI, Superannuation, deductions for advances of salary and other Council Tax attachment to earnings deductions are considered. Attachable pay includes wages/salary, overtime, holiday pay, other fees, bonus, commission, or SSP. 19

21 The service of an attachment order gives the following duties to the debtor and their employer. The Employer must notify: The Authority of the employment of a person who they know is subject to attachment Of receipt within 14 days of the order The Authority within 14 days of the employee leaving The debtor of the deductions made The Debtor must notify: The Authority within 14 days of a change in employment The Authority of a change in their earnings or deductions. Offences are committed and fines may be imposed for non-compliance with the regulations. Both the employer and the employee may be subject to the following fines: The employer may be fined for: Failure to comply with an order (Level 3) Supplying false information (Level 3) Failure to give all notifications required (Level The employee may be fined for: Supplying false information (Level 3) Failure to supply information (Level 2) When the debtor is employed by the Crown, the Chief Officer of the department in which the debtor is employed shall be treated as the employer. Although the pay of those in the armed services is specifically exempted from the definition of earnings, where the debtor is employed by the armed forces, the army may make deductions under the Army Act 1955 on request by the Local Authority. Local Authority may serve Attachment Orders on itself as employer for a debtor. Note 12 - Deduction from Welfare Benefits Where a defaulter is receiving Income Support/Job Seekers Allowance / Employment Support Allowance or Pension Credit then a deduction may be sought. The Authority is able to apply to the Benefits Agency to make deductions from Income Support or JSA for unpaid Council Tax. A Liability Order must be obtained for this purpose and there are no voluntary powers to otherwise agree such deductions. 20

22 The deduction takes place under the following rules: Application is made to the Benefits Agency Office, which is currently paying the debtor Income Support, whether or not that office is in the Authority area. The Agency must make deductions for only one Council Tax liability at a time, even where more than one liability exists. The Agency must also consider any other deductions they are already making and together with their own rules which cap the total deduction which may be made from the claimant, work out whether any deduction for Council Tax may be made. Deductions for fuel, water and rent are prioritised above Council Tax and in turn above Court fines. Deductions can only be made where the Benefit Agency claimant s name appears on the Liability Order. Note 13 - Attachment of Members Allowances Where the debtor is a Member of the Council then attempts should be made to make an attachment of his/her Member s Allowance. Deductions are permitted up to 40% of the allowance. This should only be undertaken after consultation with the Director of Services. These provisions operate separately from the rules excluding Council Members in arrears with payment from voting on certain matters. Note 14 Monitoring of Payment Arrangements Payment arrangements are monitored regularly by the system. Arrangements are made on the basis that reminder notices will not normally be issued. Where payments are not made, as agreed these cases will be moved to the next stage of recovery as shown in the enforcement options. Progression through recovery stages does not always require the sending of written notices to the debtor. However if the arrangement was set up prior to the granting of the liability order the arrangement will be cancelled and request for information and pre bailiff warning letter giving 14 days to pay will be issued (see note 9). Attachment order ends before debt paid in full This normally happens when a person leaves employment or their entitlement to the Welfare Benefit ends. When we become aware of this change we will issue an Information Request and pre Bailiff Letter (see notes 8 and 9) prior to taking further recovery action Note 15 - Bailiff Action Where referral of the debt is made to a collection agent on behalf of the Council (see the section of bailiffs in the main policy). In these cases the Officer will refer the case with relevant information to the Council s bailiff. The bailiff will acknowledge receipt of the case and comment enforcement action with 7 days. 21

23 Further Enforcement Options Note 16 Senior Officer Case Review Where further recovery action is required under this section a senior officer will conduct a review of the most appropriate manner in which to proceed. The senior officer will carefully consider the details of the case and have regard to any debtor vulnerability as outlined earlier in this report. The senior officer will make a written note of any decision and reasons why they have opted to proceed with any action in relation to any significant recovery methods used including bankruptcy, committal and the use of charging orders. Note 17 - Committal Proceedings Where the debt remains unpaid and distress has proved unsuccessful the Council will need to consider the available options. Where a Charging Order / Bankruptcy are not considered as viable options the Council will consider an application for a Warrant of Commitment. Before this course of action can be undertaken it is essential that distraint should have been attempted and a certificate confirming this provided to the Council by the bailiff. There is no legal requirement for the Council to attempt other recovery options but good practice dictates that other recovery all options should be considered. However, the Council should carefully consider the risks and benefits of committal as well as the impact on vulnerable persons. The Council should consider: The costs of the action versus the revenue derived from it The information in the Council possession concerning the debtor The value and age of the debt The vulnerability of the debtor Note 18 - Committal Hearing This is effectively an inquiry by the Magistrates into a debtor s means and conduct with a view to whether the failure to make payment is due to wilful refusal or culpable neglect. Such an inquiry can only be conducted in the presence conducted in the presence of the defaulter. If the defaulter fails to appear the Council will apply for a warrant for the arrest of the debtor. This would normally be a warrant with bail, but if there is a further non-appearance the Council will consider application for a no bail warrant. The council will normally request a person is arrested on a day of a hearing to ensure that a person is not held for an excessive time. Payment Order If Magistrates are satisfied that the Council has complied with the legislation and have also taken steps to try to recover the debt through distraint they will consider the issue of whether payment has not been made through wilful refusal or culpable neglect. If they find either present the options available to them are: issue a warrant of commitment for a period not exceeding 3 months 22

24 fix a term of imprisonment postponed under terms (usually an order for payment) to refuse to issue a warrant or fix a term of imprisonment. Payments under an order are to be made directly to the Council and the Council will monitor to ensure that the order to pay is being maintained. The Magistrates on hearing the evidence presented at the Inquiry into the means of a debtor also have the option to remit the debt in full or part. Non-payment of Court Order Where the court order is not maintained the Council will bring the debtor back before the Magistrates to seek committal to prison forthwith unless there has been a change in circumstance or the debtor is now considered vulnerable. Note 19 Bankruptcy or Liquidation Bankruptcy is a procedure available to the Council in the enforcement of unpaid Council Tax and will be considered where it is deemed more appropriate than other methods of enforcement. A check list will be completed to give an overall view of the debtor s financial status and anticipated level of equity in any property, in which they have a financial interest and the liquidity of any business interest that they may hold. The report is compiled with copies of Land Registry documents, credit reference reports, and Company House reports. Once in receipt of all relevant information a decision is taken regarding the possibility of recovering the debt using bankruptcy action. The detail of the level of equity available in any property interests of the debtor is a primary factor in this decision. However, social considerations may also dictate that the Council will consider a charging order more appropriate or whether the debt should be written off. Bankruptcy, as a course of action, should only be used with the agreement of the Head of Customer Services. Background details on each case will be supplied to the Head of Service who will use this information to determine whether the case is suitable for a Bankruptcy Petition, or request alternative action for further information. The Head of Service will sign and authorise the action and refer the matter to the Council s solicitor. Bankruptcy is usually considered after cases have been returned as unsuccessful by the bailiffs, alongside the other available options. Bankruptcy is considered an effective method of recovering the debt where there is equity in the property. Accounts considered suitable for bankruptcy are selected from cases that have previously been passed to bailiffs and have been returned either unable to gain entry, unable to gain access or returned no goods. Normally cases are targeted where there is more than one financial year s debt outstanding, or where there is a debt over 2,000 made up from debts outstanding on different accounts for one taxpayer. 23

25 When selecting if the accounts are suitable the following factors must be taken into consideration: The level of potential equity available in relation to the liable property and any other associated properties where the debtor has a financial interest and whether this is sufficient to cover the debt outstanding and any potential costs. Is the total of debts outstanding more than one financial year s value or in the case of multiple accounts more than 2,000? Is there any documentary evidence on file to suggest that the debtor could be vulnerable? If so, have attempts been made to substantiate or clarify the debtor s position. Is there any evidence or local knowledge to suggest that the property is already up for sale, or may be up for sale in the near future, in which case a charging order may be appropriate?. The Council will allow at least 21 days from the issue of the letter warning of the possibility of bankruptcy proceedings before passing cases to the Council s bankruptcy practitioners. The Council will issue a pro-forma document to the Council s Solicitor. The document will include the date that the instruction is passed to the Council s Solicitor, the name of the debtor, the property address to which the charge relates and the debtor s current address if different, the property reference number, the council tax account number (s) and the total amount being pursued. The information will supply a breakdown of each liability, date the liability order was issued and the period covered together with the amount of council tax and costs still outstanding per liability order. This is repeated for each separate account held. There is an opportunity to provide further relevant information under comments e.g. any aliases, copies of land registry details and confirmation of the date of the bankruptcy warning letter. When a case has been issued to the bankruptcy solicitors a note is placed on the council tax account to ensure that all further contact from the debtor is referred to the solicitors. On receipt of the pro-forma the solicitors will serve a statutory demand on the debtor under Section 268(1)(A) of the Insolvency Act On service of the statutory demand the solicitors have been given guidelines to make arrangements (if offered) not exceeding 3 4 months. The solicitors may contact the Council to seek authority for any arrangement that falls outside of these guidelines. If no contact is received from the debtor, the solicitors will contact the Council to seek authority to issue the bankruptcy petition. Whilst is usual to consider bankruptcy proceeding once attempts have been made to recover the debt using bailiff action. The Council do not need to have issued the liability order to the bailiffs prior to considering the action. The Council will consider bankruptcy at an earlier stage if circumstances dictate that 24

26 this would be a more effective and appropriate method of recovery action, or if a further liability order is obtained once the Council has commenced proceedings at an early enough stage to include the sum in any planned proceedings. Note 20 - Charging Order Where the Council holds information to suggest that the circumstances of the debtor would indicate that payment of the debt is unlikely to be achieved through bankruptcy, or where the current address of a debtor is either unknown or overseas, preventing service of a statutory demand, a Charging Order may be more appropriate. The Council may also consider this action more appropriate where the debtor is on a low income such as in receipt of Incapacity Benefit, resident owner of the liable property and vulnerable or elderly. (In such cases it is unlikely the Council would proceed to force a sale once a Charging Order was obtained) The Council will only proceed with a Charging Order once the Head of Service has approved such action. Background details on each case will be supplied to the Head of Service in a written summary who will use this information to determine whether the case is suitable for a Charging Order, or request alternative action, or further information. For all cases where the decision has been taken to proceed with a Charging Order, a pro-forma will be issued to the Council s solicitor. The pro-forma instruction will show: the date that the instruction is passed to the solicitor, the name of the debtor the property address to which the charge relates and the debtor s current address, if different, the property reference number the council tax account number (s) and the total amount being pursued. The information will supply a breakdown of each liability order, date the order was issued and the period covered together with the amount of council tax and costs still outstanding per liability order. This is repeated for each separate account held. There is an opportunity to provide further relevant information under comments e.g. any aliases, copies of land registry details and confirmation of the date of the bankruptcy/charging warning letter, detailing periods of liability, dates of the liability orders obtained by the Council and in each case the council tax outstanding and the costs incurred. When a case has been issued to the Council s solicitor a note is placed on the council tax account to ensure that all further contact from the debtor is referred to the solicitor. At any stage in the procedure the department will use local authority records available to it under the terms of The Data Protection Act 1998 to attempt to gain relevant information for an assessment to be made, and may also contact other agencies or services. 25

27 Once a Charging Order has been obtained and where it has been confirmed that a debtor or his/her partner are: aged 60 or over under 60 but with dependent children under 18 vulnerable Then no further action in relation to a Charging Order will be taken, i.e. the Council will not proceed to enforce an order for sale at that point. This will safeguard the most vulnerable from the effects of losing their home, but will ensure that the Authority has the ability to recover the debt on behalf of the taxpayers in the Borough, in the event of a future sale, or transfer upon the death of the taxpayer. The Head of Service may use his/her judgement at anytime in the process to refuse authority for a Charging Order or to withdraw an instruction for an enforced sale where in his/her opinion the best interests of the authority would be served by this action. The Head of Service will liaise with the Council s solicitor to determine whether a forced sale is appropriate. When this is felt to be the case they will so instruct the solicitor. Where the forced sale is not considered appropriate, the Charging Order will remain on the property until it is sold. The department may still seek recovery by other methods for any debt not covered by the Charging Order. 26

28 Appendix B Business Rates Recovery of debt in respect of business rates are laid down in statute in the Local Government Finance Act 1988 and subsequent regulations and amendments. External bailiffs are used for the enforcement and recovery of these debts. The recovery and enforcement of Business Rates debts mirror those for Council Tax in appendix A except for the following variations: Amendments to reminder processes In NDR cases a second reminder will not be sent and it is not required to send a final notice where the reminder has not been paid. A final notice will be sent where a reminder has been issued and paid, where the account falls into arrears again. Amendment to Summons Process In NDR cases an information request is not sent, instead the matter proceeds directly to a 7 day warning letter following the liability order hearing. Amendment to enforcement processes In NDR cases it is not possible to attach benefits or earnings. Amendment Note 3 Further failure to pay any instalment on or before the date it is due, shall result in the right to pay by instalments being lost. Amendment Note 4 No final is required if a reminder is not complied with within statutory time limits. A final is required where the amount due has changed between the outstanding reminder and after the issue of the relevant adjustment notice. The final notice need only be served where: There was no right to instalments; or One reminder has been previously sent, and the account has fallen behind for a second occasion; or All instalments have fallen due. Amendment Notes 9-13 inclusive Deleted in full 27

29 Business rates recovery policy flow charts and guidance 28

30 29

31 Appendix C Housing Benefit Overpayments Recovery of debt in respect of Housing Benefit (HB) overpayments are set out in the Housing Benefit Regulations 2006 and the Housing Benefit (persons who have attained the qualifying age for state pension credit) Regulations (as amended). There are separate detailed arrangements in place for the recovery, recoverability and appeals in respect of HB overpayments that are covered by the Housing & Council Tax Benefit Overpayments Policy. This appendix provides more information about recovery processes. Financial hardship If recovery of an overpayment causes financial hardship, the claimant can make a request for the deductions to be reduced. In order to establish if the claimant is suffering financial hardship it is advisable to do an income and needs comparison. Officers will have particular regard to cases where the claimant or their partner is vulnerable. Suspending Recovery In cases where an appeal or formal complaint is received, the Council is required to suspend further recovery action. Officers will place a note on the case record that the matter is in dispute and will check each month for any progress in respect of the appeal or complaint. Recovery methods Officers will determine the most efficient and effective method of recovery on a case by case basis. However, the options list below is presented in order of which option should generally be selected first to last. Reduction through underlying entitlement Deduction from rent account when overpayment relates to end of liability only Deduction from rent account where tenant / housing agree in writing Deductions from arrears due for same period Deductions from current housing benefit entitlement Deductions from other benefits Sundry Debtor Invoice (arrangement) Court Order If the option selected does not clear the full balance owed then officers will proceed with the next most effective recovery process. Similarly when a particular recovery method stops (such as a customer ending current entitlement) then the default is to collect through sundry debtor. 30

32 Deductions from current HB entitlement Recovery may be made direct from the claimant s HB by a series of deductions over a number of weeks. The recovery rates are set by government in an annual adjudication circular. Officers may increase these deductions by 50% of income that is disregarded for: earnings regular charitable income voluntary payments 31

33 Other benefits The Council may ask the DWP (Debt Management Team) to recover an HB overpayment by deduction from certain DWP benefits. Eligible benefits include: Income Support Attendance Allowance Jobseeker s Allowance (income based) Jobseeker s Allowance (contribution based) Disability Living Allowance Employment & Support Allowance (income based) Employment & Support Allowance (contribution based) Incapacity Benefit Industrial Death Benefit Industrial Injuries Disablement Benefit Carer s Allowance Maternity Allowance State Retirement Pension State Pension Credit Severe Disablement Allowance Widows Benefit War Pension War Disablement Pension Bereavement Benefit These deductions can only be made where the claimant failed to notify the Council of relevant information or misrepresented their claim. Deductions will only be made in line with guidance provided by the DWP in Guidance on HB/CTB G20/2009 and by use of approved referral forms and processes. Where the DWP are unable to commence deductions they will write and advise the Council. In these cases alternative recovery methods will be considered. Sundry debtor invoice The default position for recovery is by sundry debtor invoice. Officers will ensure that invoices are sent quickly and contain relevant information as outlined in appendix F of this policy. 32

34 County court The Benefit Team Manager will develop and maintain in conjunction with finance, local procedures in relation to collecting debts through court. The following key principles will apply: Applications will be made to hmcourts-serivce.gov.uk via the N322A form. The form will be approved by legal department. Only debts in excess of 300 will be referred to court. Once the order is approved the Council may take further recovery action. The enforcement action will depend on the debtor s circumstances. If the debtor is employed the Council should contact the court requesting an attachment of earnings order. There is a fee of 100 for this service so only debts over 300 should be considered for this process. The court will then continue to monitor payment of the debt and determine whether costs can be charged against the debtor. Warrant of execution Officers may request a warrant of execution to enable the courts bailiff to distrain goods. The court charges a fee of 100 for this service so only debts over 300 should be considered for this process. Charging order Officers may apply for a charging order in respect of the debt. The court charges a fee of 100 for this service. Furthermore, no application should be made without the agreement of the Head of Service and only in cases of large debt in excess of 1,

35 Appendix D Rent Recovery of debt in respect of Housing rents are recovered in accordance the Housing Act 1985 (and subsequent amendments). The tenant should be contacted as soon as reasonably possible if rent arrears accrue to discuss the cause of the arrears, the tenant's financial circumstances, the tenant s entitlement to benefits and repayment of the arrears. Where contact is by letter, separate copies need to be sent to each named tenant. Every effort should be made to try to agree affordable sums for the tenant to pay towards arrears, based upon the tenant's income and expenditure (where such information has been supplied in response to these enquiries). Pre-action correspondence and any time limits with which the tenant should comply need to be set out clearly. Rent statements are provided on a quarterly basis in a comprehensible format showing rent due and sums received for the past 13 weeks. Copies of rent statements should be provided, upon request by the tenant, in a comprehensible format from the date when arrears first arose showing all amounts of rent due, the dates and amounts of all payments made, whether through housing benefit or by the tenant, and a running total of the arrears. If it is believed that the tenant has difficulty in reading or understanding information given, reasonable steps need to be taken to ensure that the tenant understands any information given. It should be demonstrated that reasonable steps have been taken to ensure that the information has been appropriately communicated in ways that the tenant can understand. If the tenant is under 18 or is particularly vulnerable, it should be considered at an early stage: (i) whether or not the tenant has the mental capacity to defend possession proceedings and, if not, make an application for the appointment of a litigation friend in accordance with CPR 21; (ii) whether or not any issues arise under Disability Discrimination Act 1995; and (iii) whether or not there is a need for a community care assessment in accordance with National Health Service and Community Care Act If the tenant meets the appropriate criteria, arrangements should be made for the rent arrears to be paid by the Department for Work and Pensions from the tenant s benefit. 34

36 Assistance should be offered to the tenant in any claim they may have for Housing Benefit. Possession proceedings for rent arrears should not be started against a tenant who can demonstrate that they have: (a) provided all the evidence required to process a housing benefit claim; (b) a reasonable expectation of eligibility for housing benefit; and (c) paid other sums due not covered by housing benefit. Every effort should be made to establish effective ongoing liaison with Housing Benefit Departments and, with the tenant s consent, make direct contact with the relevant Department before taking enforcement action. Officers and the tenant should work together to resolve any Housing Benefit problems. If rent arrears are part of a general debt problem, advice should be given to the tenant by Officers to seek assistance from CAB, debt advice agencies or other appropriate agencies as soon as possible. After service of a Notice of Seeking Possession for rent arrears, but before the issue of proceedings, Officers must make reasonable attempts to contact the tenant, to discuss the amount of the arrears, the cause of the arrears, repayment of the arrears and the Housing Benefit position. If the tenant complies with an agreement to pay the current rent and a reasonable amount towards arrears, Officers should agree to postpone court proceedings so long as the tenant keeps to such agreement. If the tenant ceases to comply with such agreement, Officers should warn the tenant of the intention to bring proceedings and give the tenant clear time limits within which to comply. Officers should consider whether it is possible to resolve the issues of rent arrears by discussion and negotiation without the need for possession action. Evidence may be requested by the Court that alternative means of resolving the dispute were considered. Court action should be a last resort and claims should not be issued prematurely when a settlement is still actively being explored. Court proceedings Not later than ten days before the date set for the Court Hearing, the tenant should be provided with: (a) up to date rent statements (for the last two years or the start of the tenancy if less than two years). 35

37 (b) Any knowledge of their Housing Benefit position. The tenant should be informed of the date and time of their Court Hearing and the Order to be applied for. The tenant should be advised to attend the Hearing as their home is at risk. Records of such advice should be kept. If the tenant complies with an agreement made after the issue of proceedings to pay the current rent and a reasonable amount towards arrears, Court proceedings should be postponed provided the tenant keeps to the agreement. If the tenant ceases to comply with such agreement, Officers should warn the tenant of the intention to restore the proceedings and give the tenant clear time limits within which to comply. 36

38 37

39 38

40 Appendix E Former Tenant Arrears Former Tenant Rent Arrears - Procedures and Process Rent collection is a major source of income for landlords. It is therefore essential that current or former tenant arrears be kept to a minimum. The fact that rent is the Department s main source of income having robust and effective systematic income management strategy is a necessity. 1.0 Policy Statement Oadby and Wigston Borough Council recognise the need to ensure that an effective procedure to collect Former Tenants Arrears is established and achieved. We should also ensure that good practice for minimising former tenants arrears is in place. 2.0 Objectives We aim to meet the following criteria: To draw up effective procedures that would identify former tenant arrears at an early stage. To tackle former tenant arrears at the earliest stage so that the Authority s income is maximised. To ensure that tenants are aware of their responsibilities to the Authority before and after the tenancy agreement is terminated. To give advice and assistance on debt management to former tenants when needed. To provide former tenants and their representatives with accurate information relating to all accounts attached to their former tenancy. To ensure where possible that forwarding addresses is obtained from all tenants terminating tenancies and that any arrears balances are cleared at termination. To ensure that all former tenants who vacated the Authority s properties with rent arrears are traced after a period of three months in order to obtain forwarding address. To provide better service standard to customers as well as promoting payment culture. To provide advice and assistance to former tenants and where necessary make referrals to external agencies such as Citizen Advice Bureau for financial matter. 39

41 To ensure that former tenant arrears are actioned and monitored in accordance with the Arrears Policy. To provide incentive to all former tenants up to 25% off the total rent arrears in order to allow early settlement. Former tenants will be encouraged to agree a repayment plan that is affordable and sustainable. Income and expenditure detail should be used as a tool to measure the affordability of a repayment plan. To instigate legal proceedings when repayment plan are not maintained or have failed. Where arrears are related to a deceased tenant, the Authority will only recover funds from the estate. If there are no funds in the estate the arrears will be written off. To recommend and prepare cases for write-off in accordance with the policy. To ensure the principles of customer care and equality are fully adopted in the former tenants' arrears recovery procedures. 4.0 Former Tenant In House Recovery Procedures We will send letters to every account with a balance over where a forwarding address is known. 4.1 When a property becomes void It is important that when a tenant advises that they wish to end their tenancy, Officers should carry out a rent check to find out whether there is an amount outstanding on the account. The officer should also assess the rent charge due up to the end of termination and where possible the officer should obtain full payment of the account or agree a repayment plan. It is advisable to notify Housing Benefits when a Notice is received to enable them to proactively avoid over payments. Officers should use voids report available on a weekly basis to ensure that no terminated account is missed out. 4.2 Following a void date Where a forwarding address for an outgoing tenant is known, a former tenant standard arrears letter 1 should be sent. This letter allows him/her a period of fourteen days to contact the Authority and discuss an arrangement to repay any outstanding debt.. 40

42 4.3 After 14 days If no response is received after fourteen days, former tenant standard arrears letter 2 should be sent out providing an additional seven days to either to settle the debt in full or to contact the Authority and discuss the matter further. 4.4 When a response is made When a response is received, the former tenant should be informed of the percentage deduction (25%) which would allow him/her to early settlement of their debt. An agreement should then be acknowledged on and a letter confirming a payment plan must be sent out. The letter (agreement) should specify clearly the amount agreed, and if possible to include payments schedule. It is important that when negotiating payment plan employment information along with income/expenditures details must be gathered. This information will enable the Officers to determine the correct amount to pay. However, if a former tenant is receiving a state benefit such as Job Seeker s Allowance, Income Support or Pension Benefit, proof of such income must be presented. In this scenario a minimum weekly amount of 3.55 to 5.00 is provisionally recommended and to be reviewed within a three months period. Technically this means that for those former tenants on a low income, agreements for less than the DSS agreed welfare benefit deduction would not be accepted. At any point where a repayment agreement is defaulted, a breach letter should be sent advising a former tenant to make up an amount of breach. Note that: All copies of all letters and correspondences should be kept in the file for record purposes. 4.5 When no payments are made When a former tenant made an arrangement to pay rent arrears and failed to pay as per agreement, a home visit letter should be sent before the officer recommends and seeks approval to apply to a Small Claim Court or Money Claim Online to recover that debt. However, it is important that the claim is pursued only if the arrears are below and the case is considered not to be cost effective or the former tenant has no other debt with the Authority that legally could be pursued. In this scenario, the account will be put forward for a write-off as it is uneconomical to pursue. However, the debt could be recovered in the near future should a former tenant reappears. Officers should also check whether there is a Court Order in place before recommending another court action. When a Court Order is already in place, the officer should seek to enforce the order by applying either one or more of the following actions: 41

43 1. Application for you to attend Court for questioning. 2. Application for Attachment of Earnings Order with your present employer 3. Warrant of execution by Bailiffs against goods owned 4. Application for a charging order on any property you may own or are purchasing under mortgage. 5.0 Where Forwarding address is not known stage Description 1 A letter advising the former tenant the debt outstanding on the closed rent account 2 A second letter chasing a response to the first letter (where there is no response). 3 A third letter warning that the next step will be to pass to either refer the case to debt to an agency or Small Claim Court 4 Final letter advising of the court action. In the scenario whereby a former tenant vacated the property with outstanding rent arrears and without providing a forwarding address, tracing should be carried out after a period of three months in order to allow Officers to obtain forwarding address before preparing a write-off. The Officer should search for a forwarding or next of kin address on: tenancy files In the Homelessness register, and In the Electoral Role (primarily older debts). The Authority uses Credit Tracing Service (Experian) to search for addresses of Former Tenants. It is recommended that all former tenant account that require tracing to have an identifiable code either automatically prompt in the system or manually input so that the account is suspended for three months. It is also recommended that two trace is carried out for accounts with balance more than and one trace for account which is below before preparing the write-off report. Stage Description The actions in the table are not exhaustive and will be supplemented by telephone calls (where there is a valid phone number) and visits by Officers where a possible. 6.0 Write-Off Procedure Arrears below are automatically entered for write off against the financial accounts where the debtor has no credits on other accounts. Other cases can be considered for write off if: 42

44 There is no forwarding address ( the Experian searches have been exhausted), or Arrears for `deceased` tenants can be entered for write off if the next of kin or executor confirms in writing that there is no estate. If the next of kin cannot be traced the debt can be entered for write off. If the former tenant moves into a nursing or care home the assessment should be done before a recommending the arrears to be consider for a write-off. However, when all efforts to locate the former tenant have failed consideration should be given to writing off the debt according to the policy. It should bear in mind that this write off process does not clear the debt. The debt is still owed and if contact is made with a debtor after write off the debt should be pursued. 7.0 Tools for identifying former tenant(s) Voids Report is a report which provides information of all terminated properties such as address and the date when the property became voids. Officers can then commence a recovery process without a delay. 8.0 Incentive to Maximize the Collection of Former Tenant Income within a shorter period of time If former tenant agreed to clear 75% of the total debt [this includes Court Costs, Rent Arrears and Repair Charges] within a period of three months, he/she will be qualified to get 25% discount on the remaining balance. If 75% of the debt is to be cleared between a periods of six to 12 months, then a discount of 5% is applied. 8.1 Best Practice in Recovery of Former Tenant Arrears It is important to identify the best practice in minimising former tenant arrears by demonstrating an effective performance in the income recovery. The following are considered to be the best practices: Collect or write off. The use of tracing. In time consider in-house officer Provide incentive to debt: e.g. % reduction for clearing the arrears in one payment. Consider reduction if paying by direct debit. Performance monitoring of former tenant income collection 9 Conclusions It is important that the Council understands cause of current/former rent arrears and why do people get into arrears? We will always consider low income, bad 43

45 attitude, bad management or combination of both when considering proper advice and support. To support: 1. We will conduct background checks of tenants vulnerability and communication needs. 2. Check debts and County Court Judgements before letting properties. 3. Apply early action specifically for accounts where Housing Benefit payments are in place. Officers will continually seek out good practice and maintain trained administrative staff. 44

46 45

47 46

48 47

49 48

50 Appendix F Other income and sundry debts The default position for recovery of all income other than those relating to revenues, benefits and rents is by sundry debtor invoice. Examples of sundry income raised by the Council include: Income for goods and services (e.g. bin bags) Periodic income (e.g. licensing fees and sports grounds) Recovery of services provided to other bodies Rental payments where the Council operates as the lesser HR costs The responsibility for the raising of individual income invoices is held by Heads of Services and those outlined on the Council s scheme of delegation. Sufficient information must be provided as outlined in the main body of this policy to allow the debt to be raised using the standard invoice provided by the Integra system. Debts must be initiated by the responsible service areas to ensure appropriate segregation of duties. Service providers must endeavour to obtain payment in advance of sundry debt or at the time of service delivery where permissible. Sundry debt accounts should only be raised where payment in advance for a service is inappropriate. Regard to efficiency and the cost of raising income should be considered. A minimum value of demands can be determined by individual Heads of Service and must be notified to the Head of Finance. A consistent method of recovery should be perused for all sundry debtors: Except in the case of a demand payable by instalments or as otherwise contractually agreed, the settlement term for all demands will be within 30 days. Where no payment or arrangement to pay is received within 30 days of the income, and the balance exceeds 30 the Council will send a reminder notice. Where the balance is less than 30 the amount will be written off. Where no payment or arrangement to pay is received within 14 days of the reminder notice the Council will send a final notice. Where no payment or arrangement to pay is received within 30 days of the final notice the Council will refer the debt to the contracted bailiff who will pursue the debt using agreed methods of recovery (e.g. home visits, out of hours calls and tracing) As outlined in the Bailiff contract, details of all referred debt will be provided to finance on a periodic basis, along with any recommendations for write off. The status of debts reported will be communicated to relevant Heads of Service to review for write off. Ownership of all sundry debts rests with the originating services and they can issue an instruction to cancel an invoice. It is the 49

51 responsibility of the originating services to correspond with or discuss with the debtor issues relating to the validity of the debt. Where legally permissible, the provision of future services to the debtor will be suspended until outstanding debts are settled. Other income not originating with the Council In the case of court costs, the Council is not directly responsible for raising or recovering debt. These are dealt with by the relevant court which has conducted a prosecution. If a costs order is made, the defendant is ordered to pay an amount and can be permitted to pay in instalments. The legal department will advise Finance of the outcome of case in respect of court costs. Finance will communicate statements received from the court on a monthly basis to the legal department to allow the debt to be managed. If payment is not made by the debtor, as outlined in the statements, relevant enforcement action will be taken, as determined by the legal department. Methods of recovery pay include: A warrant of execution (aimed at assets of goods owned) An attachment of earnings order (aimed at wages or salary assets) A third party debt order (aimed at saving assets) A charging order (aimed at property land or investment assets) The value of the debtors due to the Council, as advised by the Court at 31st March each year will be accrued into the Statement of Accounts as required. Court costs Court costs arise when the Council successfully conducts a prosecution. The final amount of costs agreed will vary from case to case depending on matters such as the aggravating and mitigating factors, antecedents and the Defendants means. If a costs order is made, the defendant is ordered to pay an amount and can be permitted to pay in instalments. The legal department will advise Finance of the outcome of case in respect of court costs. Finance will raise the appropriate invoice and monitor payments. Where payments are not made: If the debt is a criminal debt the Magistrates Court ordinarily collects the costs on behalf of the Council under the terms of a Collection Order. If the cost is on a monthly term the court will send monthly BACS or cheques but if it is in one payment they will send one payment accordingly. If the Defendant defaults the court is not under a duty to inform the Council. The onus is on the Council to monitor the account. Therefore the Finance Department will notify The legal department who will liaise with the court in this regard to seek enforcement. 50

52 If the debt is civil before a county court and the Respondent has not paid, Finance will notify the legal department. The legal department will issue a letter threatening that non payment of the debt will result in further legal action. Enforcement action with then be taken by the Legal department. The Legal department can enforce debt recovery by any of the methods listed below. Each method is directed at a different aspect of the Respondent s assets and the legal department will determine the most appropriate method to recover costs in line with this policy. A warrant of execution (aimed at assets of goods owned) An attachment of earnings order (aimed at wages or salary assets) A third party debt order (aimed at saving assets) A charging order (aimed at property land or investment assets) In determining any enforcement the Council will have regard to: The costs of the action versus the revenue derived from it The information in the Council possession concerning the debtor The value and age of the debt The vulnerability of the debtor The above list is not exhaustive. HR costs HR costs arise in situations where there is a reclaim of: Post entry training; Relocation expenses; Car loans; Overpaid salary to former employees. These amounts fall due under the terms of contract so the HR team will ensure the debtor is aware of the balance due by writing to the individual and by requesting an invoice is raised by Finance. Finance will continue to monitor repayment of the balance owed. Where payments is not forthcoming they will advise HR who will consider further enforcement action through breach of contract and will notify The legal department accordingly. Licensing costs Costs arise in relation to annual premises fees. These fees will be invoiced by the Finance team who will monitor the account. Where a fee is unpaid the Finance team will notify licensing who will consider suspending the licence and provide advice in relation to any further recovery action required. 51