Oadby and Wigston Borough Council CORPORATE DEBT POLICY

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) 288 8961 or email us at customerservices@oadby-wigston.gov.uk Version: 2.9 September 2012

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 5 10. Communicating with Customers 5 11. Debt repayment 5 12. Late and unpaid debts 6 13. Multiple debts 6 14. Tracing 6 15. Advice and assistance 7 16. Enforcement action 7 17. Vulnerability 8 18. Priority debts 9 19. Complaints 9 20. Monitoring of debts 10 21. Training and compliance 10 22. Write offs 10 23. 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

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: 2.1.1. Ensure a professional, consistent and timely approach to debt recovery action across all Council functions; 2.1.2. Help minimise debts to the Council and improve income levels; 2.1.3. Promote a co-ordinated approach to sharing debtor information and managing multiple debts owed to the Council; 2.1.4. Ensure that individual and exceptional circumstances are given due consideration when pursuing debts particularly in relation to vulnerability; 2.1.5. Ensure that debts are managed in accordance with legislative provisions and best practice; and 2.1.6. 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 2006. 2

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): 4.1.1. Financial Regulations; 4.1.2. Fees and Charges Book for the relevant year; 4.1.3. Anti Fraud and Corruption Policy; 4.1.4. Complaints Policy; 4.1.5. Customer Care Policy; 4.1.6. Prosecution Policy and Manual; and 4.1.7. 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): 5.1.1. Local taxes; 5.1.2. Benefit overpayments; 5.1.3. Rent and former tenant arrears; 5.1.4. Fines; 5.1.5. Fee and charges for services; and 5.1.6. Court costs and cost orders. 5.2. 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. 5.3. 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

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: 7.1.1. The debtor is deemed to be vulnerable; 7.1.2. Where the debt is irrecoverable; 7.1.3. Where the debt is not enforceable; 7.1.4. Where it is in the interest of the Council to do so; 7.1.5. Where the debtor is bankrupt; and 7.1.6. Where there is a debt relief order in place. 7.2. 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. 7.3. 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: 8.1.1. Full debtor name(s)*; 8.1.2. Contact address (or last known address); 8.1.3. Charge address (if different); and 8.1.4. Phone number. 8.2. 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. 8.3. 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: 8.3.1. What the bill / debt is for; 8.3.2. When payment is due; 8.3.3. How payment should be made; and 8.3.4. How to contact the Council in the event of a query. 8.4. Debtors will be encouraged to make prompt contact if they disagree with a bill or have difficulty in making payment on time. 4

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. 9.1. 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 10.1. 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. 10.2. 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 11.1. The Council has a standard policy to commence recovery action following the standard payment terms of 30 days, excepting provisions outlined in the appendices. 11.2. 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. 11.3. 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. 11.4. 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

12. Late and unpaid debts 12.1. 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. 12.2. 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 13.1. 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: 13.1.1. Identify the action being taken by other services against the debtor; 13.1.2. Establish which debt should have the greatest priority for repayment; 13.1.3. Ensure that repayment plans are realistic, in light of other debts owed to the Council; and 13.1.4. Work together to ensure the most effective method of recovery without placing the customer into hardship. 13.2. 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. 13.3. 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 14.1. 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

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 15.1. 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. 15.2. 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 16.1. When considering enforcement action, officers should adhere to the following principles: 16.1.1. Action will be proportionate; 16.1.2. Action will be consistent; 16.1.3. Action will be transparent; 16.1.4. Our Action to date; and 16.1.5. The amount owed. 16.2. Proportionality allows for a balance to be struck between the potential loss of income to the Council and the costs of compliance. 16.3. Consistency means taking a similar approach in similar circumstances to achieve similar ends. This relates to: 16.3.1. The advice given by officers; 16.3.2. The use of powers; and 16.3.3. The recovery procedures used. 16.4. 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: 16.4.1. The social circumstances of the debtor including their vulnerability; 16.4.2. The debtor s payment history; and 16.4.3. The debtor s ability to pay. 16.5. 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

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 17.1. 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 18.1. 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. 18.2. When considering vulnerability officers will consider: 18.2.1. Is it reasonable for the person to understand the consequences of the action we are taking; and 18.2.2. Is it reasonable for the person to understand the consequences of actions or inaction on their part. 18.3. 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

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. 18.5. 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. 18.6. 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 19.1. 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: 19.1.1. Council Tax; 19.1.2. Mortgage arrears; 19.1.3. Rent arrears; 19.1.4. Income Tax and VAT; 19.1.5. Fines; 19.1.6. TV licence fees; 19.1.7. Maintenance and child support; 19.1.8. Fuel debts; 19.1.9. Business Rates; and 19.1.10. Hire Purchase for goods that are essential e.g. a car needed for work. 19.2. These debts should be prioritised for recovery from debtors. 19.3. Non-priority debts are: 19.3.1. Credit Card and Store Card arrears; 19.3.2. Catalogue arrears; 19.3.3. Bank overdrafts and loans; 19.3.4. Payday loans; 9

19.3.5. Hire Purchase for goods that aren t essential e.g. a television; and 19.3.6. Money borrowed from family and friends. 19.4. 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 20.1. 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

21. Monitoring of debts 21.1. 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. 21.2. 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. 21.3. 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 22.1. 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. 22.2. 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 23.1. 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

24. Bailiffs 24.1. 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. 24.2. 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. 24.3. 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. 24.4. Cases must be withdrawn from the bailiffs in the following circumstances, where there: 24.4.1. Is a justified dispute in liability; or 24.4.2. The instruction to the bailiff was issued in error 24.5. Cases may be withdrawn from the bailiffs in the following circumstances, where: 24.5.1. The debtor has recently been bereaved of a close relative of household member; 24.5.2. An attachment order (wages, benefit or allowances) is in effect; 24.5.3. The debtor is bankrupt; 24.5.4. Recovery of the debt can be affected more effectively through another method; or where 24.5.5. The Head of Service or Senior Recovery Officer feels the matter should be withdrawn 24.6. The performance of the bailiffs will be reviewed at formal review meetings with the account manager. 12

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

Council tax recovery policy flow charts and guidance 14

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

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

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

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

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

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

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

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

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

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 1986. 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

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

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