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Justices’ Clerk

Leicester Magistrates' Court
15 Pocklingtons Walk

xx xxxxxxxx
North East Lincolnshire

10 January 2015
Dear Mr Xxxxx

Re: Costs Application – Council Tax and Non-Domestic Rates Liability Orders

I am writing in the matter of Leicester City Council’s correspondence sent to you on 6 August
2015 regarding its Council Tax court costs breakdown which informs the level that will be
applied for all summonses issued from 1 September 2015.
I have done some research in this area and consequently become familiar with the kind of
expenditure billing authorities in general consider they are entitled to attribute to the costs
recharged to defendants. I have consistently found that Council’s claim entitlement to
recharge all expenditure which may be considered attributable to recovery and enforcement in
respect of merely applying for a liability order. This is implied in the 6 August
correspondence where activities are itemises in the breakdown summary such as management
costs, monitoring cases, staff cost relating to making complaint, etc. etc. The majority of
expenditure is clearly attributed to resources used for engaging with customers (telephone,
face to face, email, complaints, website and correspondence).
A number of authorities have even gone further by admitting that the cost of administrating
the various recovery methods available to secure payment, once a liability order has been
obtained, is legitimate expenditure to recharge in applying to the court to enforce the debt.
Whether any of that expenditure is included in the calculation would require a proper
breakdown rather than just a rough estimate, though more detailed spreadsheets relating to
previous years suggest post liability order work is recharged to the costs. For example, its
spreadsheet for 2011/12, attributes expenditure derived from the number of telephone calls,
home visits and letters, but an annotation described these as “relating to recovery”. The
2014/15 spreadsheet implies similarly with an annotation describing around £136k
expenditure as follows: “Standard staff salaries/costs for 5 FTE recovery staff dealing with
all aspects of general recovery.” The law is clear that only costs which have reasonably
incurred in obtaining the order are permissible. Interpreting the law in a way that extends to

encompassing all recovery and enforcement expenditure is generally justified by the fact that
it serves to keep the financial burden on the general taxpayer to a minimum, even though the
law in fact provides only for application costs.
Double Counting to artificially inflate Costs
The spreadsheets, for previous years, provide hourly rates and hours attributed to staff
engaged in these activities, whereas the summary in the 6 August correspondence only gives
gross figures. That greater detail provided evidence that the hourly rate was calculated and
then counted twice to double the amount of expenditure attributed to that element of costs.
For example, the 2011/12 breakdown set out the hourly rate for staff dealing with recovery at
£13.94 (including employment costs) then doubled to £27.88 and applied as the hourly rate in
respect of the time attributed to recovery work (see below):

Scale 5 - per Annum


Scale 5 - per hour


Employer Cost - 25%


Cost of employing staff to do the "day work"
while staff are dealing with recovery work

It is noted that Leicester City Council has provided the Schedule having regard to the
principles highlighted by the High Court in R (Nicolson) v Tottenham Magistrates [2015]
EWHC 1252 (Admin). It is particularly with regard to para 46 of the judgment and reference
to “double-counting” that its claim to provide “sufficient information to reach proper judicial
determination” is arguable.
In setting out what is and what isn’t permissible expenditure, para 46 of the judgment,
strongly implies the approach taken whereby staff costs are doubled as described above is not
permissible (see below):
“In principle, therefore, provided that the right types of costs and expenses are taken
into account, and provided that due consideration is given to the dangers of doublecounting, or of artificial inflation of costs, it may be a legitimate approach....”

As stated, there is evidence of “double-counting” in the more detailed spreadsheets but the
summary provided in the 6 August letter omits this. However, a comparison of the gross costs
set out in the summary which can be reasonably assumed to correspond to the same activity in
the spreadsheets suggests that it has continued, even though the principles of the High Court
judgment have been considered (see the following).
It has been possible to identify from the spreadsheet relating to Leicester’s 2014/15 costs that
a sum of £1,652,088 was attributed from staff hours totalling 58,653 hours. Of those hours,
767 corresponded to a £22.67 per hour rate; the other 57,886 hours to a £28.24 rate. The latter
rate (£28.24) was the result of being doubled in the way described previously and accounts for
£817,350 that was double counted.
The summary (6 August 2015), though less comprehensively detailed returns a similar
amount of staff expenditure when aggregated, i.e., £1,639,731. This represents a small
discrepancy (less than 1%) of the figure accounted for in the 2014/15 spreadsheet, for which
£0.82 million was counted twice. The indication therefore is that the practice has continued
despite the principles highlighted in the High Court judgment in the Tottenham Magistrates
Standard charge levied in all cases
It is assumed that the Council seeks reliance on the judgment (paras 45-46) in its approach of
levying a standard sum of costs across the board, thus having no obligation to calculate costs
individually on a case by case basis. Though that is the general guidance, it must also be
applied taking on board Mrs Justice Andrews’ opinion that in principle, it may be a legitimate
approach, 'provided that the right types of costs and expenses are taken into account'.
J Andrews expressed at para 46 that it may be a legitimate approach to apply a standard sum
in all cases. However, if wanting to take that approach (and do so lawfully) the standard sum
would also have to be properly referable to the Council Tax (Administration and
Enforcement) Regulations 1992 (regs 34 and 35). If there is any doubt as to what these
regulations provide, clarification has been provided in the Council Tax Practice Note 9:
Recovery and Enforcement, produced by the Department of the Environment (1993) and more
recently in the 2013 Government good practice guide, for the collection of Council Tax
arrears. Both state that “the amount claimed by way of costs in any individual case is no more
than that reasonably incurred by the authority”.

Given that the amount claimed by way of costs in any individual case must be no more than
that reasonably incurred by the billing authority, if the Council wanted to take advantage of
streamlining the administration process by applying a standard sum in all cases, in order for it
to be done lawfully, it would need to forfeit each element of expenditure it incurs that is not
common to every application. So in this, and all similar breakdowns, that would account for
the largest element of expenditure.
In other words, a standard sum could not exceed that incurred by the authority in a case where
the least expenditure is attributed. In practice, that would be a taxpayer who simply settles his
outstanding debt on receipt of a summons, but without contacting (thereby burdening) the
Council on any issue. Deriving a figure therefore from the gross costs, which is split between
an estimated number of defendants, can not be lawful; even less so if that number is reduced
to account for liability orders rather than summonses.
The least cost case is the only basis on which to determine a standard sum if the aim is to
eliminate the administrative burden of calculating the costs in each case, whilst at the same
time complying with the regulations which require that the costs be no more than that
incurred by the authority in any individual case.
I hope the above information will be of use for the court to determine in future a suitable level
of costs which are in accordance with the relevant provisions.
Should you have any questions, please don't hesitate to contact me.

Yours sincerely

X. Xxxxxx