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CouncilTaxDebtRecovery PDF
CouncilTaxDebtRecovery PDF
CouncilTaxDebtRecovery PDF
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Council Tax and Benefits: Debt Recovery Processes
1. Introduction
This document sets out Newham’s Council Tax and Benefits Service approach in relation to
the recovery of unpaid council tax and unpaid housing benefit (HB) overpayments.
The document also sets out how we will identify and deal with vulnerable residents, and
those experiencing serious financial difficulties. Our aim is to minimise undue stress and
hardship on vulnerable people, and to make arrangements which are both affordable and
sustainable.
The powers for the recovery of unpaid council tax are contained within The Council Tax
(Administration & Enforcement) Regulations 1992.
The powers for the recovery of unpaid HB overpayments are contained within The Housing
Benefit Regulations 2006, and The Housing Benefit (Persons who have attained the qualifying
age for state pension credit) 2006.
2. Overall approach
The Council Tax and Benefits Service (CT&B) has a statutory duty to collect monies owing to it
and seeks to employ the most cost effective methods of recovery while fully meeting its
statutory requirements within the legislative framework.
CT&B is also committed to assisting debtors to pay their council tax bills and HB
overpayments. This includes:
a) Providing debtors with timely and accurate bills, decision notices and invoices (as
appropriate)
b) Providing debtors with assistance to make affordable payment arrangements based on
their financial and household circumstances
c) Offering a range of payment options, dates and frequencies when payments can be
made
d) Signposting debtors to a range of available debt advice and benefits advice
e) Referring debtors with serious or multiple debts to our own Debt Advice Team for support,
where appropriate
Where following these measures council tax bills or HB overpayments remain unpaid, CT&B
will use all available powers open to it in order to pursue these debts:
• Council Tax debts – we can summons to Court, and after a liability order has been
obtained we can collect through an attachment to earnings/benefits, through
enforcement agents, obtain a charging order against property, declare a person
bankrupt; in extreme cases imprisonment is also an option
• HB Overpayments – we can recover overpayments from ongoing and future
entitlement, collect through an attachment to earnings/benefits , collect through
enforcement agents, obtain a charging order against property, declare a person
bankrupt, obtain a third party debt order or a County Court Judgment
Paragraph 3 of this document sets out the usual stages of collection and recovery of Council
Tax due. Paragraph 4 sets out the usual recovery processes for Housing Benefit
overpayments.
Where we establish that a debtor is vulnerable, or has a vulnerable person in their household,
and is deemed unable to manage their financial affairs or not capable of understanding the
Council Tax and Benefits: Debt Recovery Processes
recovery process or the consequences if a debt remains unpaid, we will aim to work with the
debtor in the most appropriate way, based on the individual merits of their circumstances.
Paragraph 5 of this document sets our approach to dealing with vulnerable debtors.
Where a person has failed to pay following a second reminder or has no right to pay by
instalments, then a Final Notice will be sent. This requires payment in full within seven days, as
failure to pay will lead to the issue of a summons for a liability order.
Where the circumstances are appropriate, a further payment arrangement may still be
entered into at this stage.
Council Tax and Benefits: Debt Recovery Processes
Stage 4: Summons
Where a debtor has failed to bring their account up to date, a summons for a liability order
will be issued along with an arrangement form, giving the debtor a further opportunity to
make an arrangement.
Where contact is made with CT&B , the debtor has the opportunity to explain any personal
circumstances or financial difficulties they may have and to negotiate an arrangement
based on these circumstances.
The liability order application will generally still go ahead, but no action will be taken to
enforce the debt if payments are maintained.
Unless agreed otherwise, where the right to instalments has been lost and an amount
remains outstanding, a summons will be issued advising that a liability order will be sought
from the magistrates’ court. Additional costs for this summons are added to the amount due.
Stage 5: Liability order hearing
Council staff attend the magistrates’ court to assist debtors attending the liability order
hearing, with a view to making an appointment to attend the local office to discuss a
payment arrangement with an officer.
Where the court grants a liability order, there is still a further opportunity at this stage for the
debtor to make a payment arrangement or raise any other issues.
Stage 6: Liability order
A liability order gives the Council certain powers in order to collect the outstanding debt.
These are:
• Power to seek information about someone’s income;
• Power to deduct money direct from earnings
• Power to deduct money direct from benefits;
• Power to refer the debt for collection to our appointed enforcement agents
• Power to declare someone bankrupt;
• Power to apply to the county court for a charging order against property
We cannot apply to the magistrates’ court to commit a person to prison at this stage.
Methods of enforcement
Once we have been granted a liability order, we will normally seek to recover the debt
through an attachment of earnings or benefits, before we consider referring a debt to
enforcement agents. Prior to sending any cases to our Enforcement agents we will write to
the debtor to encourage them to contact us to discuss their debt.
Attachment of earnings
Where a debtor is in employment and those details are available, consideration will be given
to deducting instalments direct from wages or salary.
The amount to be deducted is worked out by the debtor’s employer as a percentage of net
earnings, and may vary from week to week or month to month - for instance if overtime is
worked. The percentages are set out in law and neither the Council nor the employer can
change these levels.
In accordance with relevant regulations, councils are not allowed to have more than two
such orders in place at any one time.
Attachment of certain social security benefits
Where a debtor is in receipt of certain social security benefits we can ask the Department for
Work and Pensions (DWP) Debt Management Team to deduct payments direct from their
benefit.
Council Tax and Benefits: Debt Recovery Processes
Regulations specify the maximum amount that can be made by way of direct deductions.
Deductions made from a debtor’s social security benefit are normally sent to us on a monthly
basis by the DWP Debt Management Team. The DWP will inform us and the debtor of the
weekly deduction being made.
If making deductions would leave a debtor without enough money to live on, the DWP will
be unable to make deductions and will write to us. We will then contact or write to the
debtor with a view to making an alternative payment arrangement. If no contact is made,
the account may be referred to enforcement agents.
Enforcement Agents
We only send cases to enforcement agents where:
• No arrangement has been made: and/or
• Alternative ways of collecting the amounts owed, such as deduction from benefit or
attachment of earnings is not appropriate
Enforcement agents are bound by the Taking of Goods Act (2013) when acting on a case
referred to them, and includes the level of fees they can levy on the debtor.
Enforcement agents will generally be prepared to enter into a payment arrangement with
the debtor during the first or second stage of the enforcement process. Where they are
unable to collect the debt in full, the account is returned to us.
Where an account is returned to us, we will review it and take appropriate action. This may
lead to an application for:
• Insolvency
• Charging order
• Committal to prison
In each of the three options stated above, debtors are encouraged to contact us on receipt
of summonses or other documents sent to them to discuss payment – but clearly by this late
stage any arrangement has to take into account the legal process then underway.
Insolvency action
An application may be made in the High Court for a debtor to be made bankrupt, where
we believe they have sufficient assets for the Council to expect payment in full either before
the hearing or once assets have been realised.
This means that any assets owned by the debtor subject to the order - such as property,
shares or savings - may be used to clear the debt. The court costs will be charged to the
debtor concerned.
Charging order
We may make an application to the County Court for a charging order where the debtor
owns property. The court costs will be charged to the debtor concerned.
Once an entry is made at the Land Registry confirming that the debt has been secured, the
property cannot be sold without the council tax debt being paid first. In certain
circumstances, statutory interest can also be claimed.
Payments can still be made to reduce the debt. If the debt is paid in full, including costs, the
charge will be removed.
Enforced Sale
Where a charging order has been made, we may go on to apply to the County Court for an
order for possession and sale, which gives us the power to sell the property at auction.
We only seek such an order where the property is not anyone’s sole or main residence.
Committal
Council Tax and Benefits: Debt Recovery Processes
Where a liability order has been returned by the enforcement agent and endorsed ‘no
effects’, an application can be made to commit that debtor to prison.
A summons is issued for the debtor to attend the magistrates’ court to explain why the
amount remains outstanding.
The options available to the court are:
• To make an order of imprisonment of a maximum of 90 days, usually suspended on
payment of a set amount at intervals set by the court
• To allow the case to be withdrawn for other actions, for example insolvency, charging
order or attachment of earnings
• To write off some or all of the debt due to an ongoing inability to pay
The court costs will be charged to the debtor concerned.
Andi Frangeskou
CT&B Training Manager
6/5/15