Exercising discretion when applying to the court for a Council Tax Liability Order

Roedd y cais yn llwyddiannus.

Dear Harlow District Council,

The Council Tax (Administration and Enforcement) Regulations 1992 (the "Regulations") confer a duty on the billing authority to exercise discretion under regulation 34(1) when deciding whether to institute a complaint to the Magistrates' court to enforce payment.

Regulation 34(1) as amended by Regulation 15 of SI 1992/3008 states, with the relevant part emphasised, as follows:

"If an amount which has fallen due under paragraph (3) or (4) of regulation 23 (including those paragraphs as applied as mentioned in regulation 28A(2)) is wholly or partly unpaid, or (in a case where a final notice is required under regulation 33) the amount stated in the final notice is wholly or partly unpaid at the expiry of the period of 7 days beginning with the day on which the notice was issued, THE BILLING AUTHORITY MAY, in accordance with paragraph (2), apply to a magistrates' court for an order against the person by whom it is payable."

Regulation 34(2) states as follows:

"The application is to be instituted by making complaint to a justice of the peace, and requesting the issue of a summons directed to that person to appear before the court to show why he has not paid the sum which is outstanding."

The following are examples (but by no means exhaustive) of what are reasonable factors a recovery officer should take into account in exercising discretion to institute a complaint to the Magistrates court under paragraph (2) of regulation 34 of the Regulations:

1. the level of debt outstanding

2. any payments made subsequent to the full amount becoming due and time remaining of the financial year

3. are circumstances indicative of the debt being settled without resorting to enforcement

4. consider if enforcing the debt would unnecessarily subject the taxpayer to additional costs etc. and therefore amount to a penalty (see 3 above)

5. ensure monies have been prioritised to maintaining the in-year debt

6. allocate to the in-year any monies posted to arrears (or sufficient of it) that would if it had not been misallocated prevented the in-year liability also falling in arrears (see 5 above)

7. check for benefit claims or appeals already in the system and refrain from taking enforcement action where such genuine cases are unresolved

Q1. Does Harlow District Council exercise discretion before proceeding under regulation 34(2) of the Council Tax (Administration and Enforcement) Regulations 1992 to request a summons from a justice of the peace (it may be an automated process)

Q2. If yes to (1) what factors are taken into consideration

Yours faithfully,

Helen Barker

Contact Harlow, Harlow District Council

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Contact Harlow, Harlow District Council

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Toby Bowler, Harlow District Council

2 Atodiad

Good afternoon

 

With regards to the above mentioned Freedom of Information request, please
see attached

 

Kind regards

 

Toby Bowler

Systems Administrator and Project Officer

Revenues & Benefits

 

Alternative Contacts:

Paul Montgomery – Senior Manager (Support & Development)

Andy Kemp – IT Systems Administrator and Project Officer

 

Visit our website [1]www.harlow.gov.uk

Follow us on twitter @HarlowCouncil

 

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Dear Toby Bowler,

Thank you for your response.

Other information I have seen from various sources indicate that discretion is not exercised at the point where a decision is needed to be made about whether to request a summons. Discretion is applied earlier than this, after a summons has been issued but before a liability order is obtained and after a liability order has been obtained.

Also, it does not constitute discretion if a decision of whether to apply it or not depends on being prompted by the customer. It is apparent from information I have seen that the defendant incurs a £50.00 sum in respect of the council requesting the issue of a summons (an automated procedure). However, that sum actually covers the council's additional expenditure in respect of officer time engaging with customers at the final notice stage and after a summons has been issued who query their accounts to arrange payment plans and which would be conditioned in the latter case upon the council obtaining a Liability Order (to secure the debt) adding a total £95.00 court costs comprising summons costs of £50.00 plus a further £45.00. This sum (£45.00) is added to the £50.00 costs already incurred for the request of the summons in respect of the accounts of all customers who have not paid the total amount outstanding of their liability, whether choosing to query their accounts or not. This is presumably to compensate the council for the officer time attributed to dealing with customers (in respect of those who contacted them) and making the application for a Liability Order (on day of the hearing).

Although its possible for a customer to avoid potential summons costs even earlier, for example, when a taxpayer who is struggling to pay contacts the Council and negotiates extra time to bring payments up to date so that the next stage of enforcement is not progressed. Discretion whether to enter into a payment agreement with a taxpayer is applied again once the council has obtained a liability order (as an alternative to taking recovery action) but of course by that time she will have had the total £115.00 court costs added to the debt and included in the payment plan.

So the costs in reality cover the council's additional expenditure both before the summons is requested and after the liability order has been obtained in respect of officer time engaging with customers who agree to enter into payment arrangements and almost certainly the general administration of the council tax and enforcement departments.

Additionally the fee paid to HMCTS which is incorporated into the summons cost was reduced a year or two ago. The £3.00 fee was reduced by £2.50 to £0.50 after a detailed review had been carried out by the Ministry of Justice (it identified that the court were making a profit). However, the costs recharged to the customer didn't reflect the council's reduction in expenditure, the total costs remained at £95.00.

It is generally accepted by billing authorities that defences against the issue of a Liability Order at the court hearing which are considered to be valid are very restricted. However, there are eight obvious additional defences that would be valid if no discretion is exercised prior to requesting the issue of a summons and expenditure incurred by the council outside the process of applying for and obtaining a liability order are included in those costs. They would be that;

1. the billing authority has not (does not) comply with regulation 34(1) of the Council Tax (Administration and Enforcement) Regulations 1992;

2. expenditure amounting to £50.00 was not incurred by the council in respect of instituting the complaint;

3. the costs have been inflated to subsidise customers who opt to make payment in line with the pre-arranged payment plans;

4. the costs in respect of instituting the summons include expenditure which is incurred by the council after that action;

5. the costs have been inflated specifically by an amount equal to the reduction of the fee payable to HMCTS for each application; and

6. the costs in general have been inflated to subsidise expenditure incurred in respect of potential applications to the court which are prevented by virtue of the extra time negotiated for payments to be brought up to date;

7. the costs in general have been inflated to subsidise expenditure incurred by the council in respect of officer time monitoring arrangements and/or engaging with customers after the process of applying for and obtaining the liability order has ended; and

8. the costs in general have been inflated to fund the running of the council tax and enforcement departments.

I would appreciate the council reviewing my request and confirming that the response to my request is "No" to (Q1) and therefore "N/A" in respect of (Q2).

Yours sincerely,

Helen Barker

Toby Bowler, Harlow District Council

Good afternoon Mrs Helen Barker

I have discussed your email with the Senior Manager for Revenues and The Revenues and Benefits Manager and we are still of the belief that our original response it correct. If you wish to appeal this then details of how you can do so are in my original response.

Kind regards

Toby Bowler
Systems Administrator and Project Officer
Revenues & Benefits

Alternative Contacts:
Paul Montgomery – Senior Manager (Support & Development)
Andy Kemp – IT Systems Administrator and Project Officer

Visit our website www.harlow.gov.uk
Follow us on twitter @HarlowCouncil

Harlow Council, Civic Centre, The Water Gardens, Harlow, Essex, CM20 1WG

National coronavirus (COVID-19) situation

We are continuing to run essential services at this time and our service provision continues to be reviewed as government guidance changes. The latest service updates and information on how we are supporting residents and businesses at this time can be found on our coronavirus webpage www.harlow.gov.uk/coronavirus

The Civic Centre remains closed to the public, but you can still contact us by phone on 01279 446655 Monday to Friday 9am to 4.45pm. If you have been impacted by the coronavirus outbreak you can phone our Community Hub on 01279 927005. The hub can help you access food, prescriptions and help you find other support. The hub is open Monday to Friday 9am to 5pm and 10am to 1pm on Saturdays and Sundays and bank holidays.    

The latest government public health advice on what you need to do can be read on the government’s website https://www.gov.uk/coronavirus

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Dear Toby Bowler,

Thank you for your response, which included the statement that the Senior Manager for Revenues and Benefits stands by its original response. I understand that the council must be mindful of the Council Tax (Administration and Enforcement) Regulations 1992 and all established case law regarding court costs.

I am aware of a number of cases but particularly two which I would like to refer to regarding your response namely R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin) and Williams v East Northamptonshire [2016] EWHC 470 (Admin)

Williams v East Northamptonshire [2016] EWHC 470 (Admin

I note the council's website states that "costs of £50 for the issue of the summons, will be added to your unpaid Council Tax account". am making the assumption that the costs are actually added to the customer's account at this point because it is generally the approach taken by local authorities.

I am aware that in the East Northamptonshire case, the judgment went to some lengths to clarify the position with regard to when, i.e. at what stage it was permissible for a billing authority to add summons costs to a customer's account. In essence, what the judgment determined was that it was entirely lawful for the billing authority to inform the customer by stating on the summons the amount of costs it would ask for in the event it proceeded to make the application at court for a Liability Order. Implicit in this is that it is impermissible to add to the customers account at this point the costs claimed by the billing authority because there is only any legal basis to do so once the court has granted the Liability Order. The following in paragraph 28 of the judgment bears this out:

"...I have come to the clear conclusion that the summons is not an abuse of the process or otherwise invalid by reason of the fact that it includes reference to a claim for costs. The heading of the summons makes clear it seeks recovery of the Council Tax only. The complaint is therefore only as to the non payment of the Council Tax. The tax due is the Council Tax which is separately identified both on the first page and on the subsequent page. It is abundantly clear that the subject matter of the summons is therefore the recipient’s liability for the Council Tax...."

NO LEGAL BASIS TO PURSUE LIABILITY ORDER ONCE AN AMOUNT AGREED

The Council's website informs customers that once they have received a summons, a payment arrangement may be agreed on the condition that the council will still request a liability order from the Magistrates Court, implying a further sum of £45.00 will be incurred additional to the costs already incurred by the customer in respect of issuing the summons (£50.00).

These costs are incurred at a point after the customer has tendered payment. Therefore, the cost attributable to this activity could not lawfully be included in the costs claimed because expenditure may only be recharged that has been incurred by the authority up to the time of the payment or tender and clearly resources called upon by engaging staff in the matter would occur after payment was tendered. Expenditure incurred by the authority after that point falls on the wrong side of line to be referable to the summons and would only be lawfully recharged (if eligible) in respect of those who had not paid or tendered to the authority the aggregate of the outstanding amount and costs before the court hearing because only those customers may be proceeded against further and incur additional costs.

To be clear, it is not just the costs in these circumstances which are artificially inflated by either front loading or being charged where there is no legal basis at all which is a point of contention. The consequences are that for all those cases against whom the council proceeds in order to secure the debt once an amount has been agreed (the payment arrangement), the action is unlawful because regulation 34 of SI 1992/613 provides that the authority shall accept the amount and the application shall not be proceeded with in these circumstances.

Paragraph 34(5) of the regulations, are as follows (with emphasis):

“(5) If, after a summons has been issued in accordance with paragraph (2) but before the application is heard, there is paid or TENDERED to the authority an amount equal to the aggregate of—

(a) the sum specified in the summons as the sum outstanding or so much of it as remains outstanding (as the case may be); and

(b) a sum of an amount equal to the costs reasonably incurred by the authority in connection with the application UP TO THE TIME OF THE payment or TENDER,

the authority shall accept the amount and the application shall not be proceeded with.”

The authority could not defend its actions on the grounds that an arrangement does not constitute payment therefore it is entitled to obtain a liability order to secure the debt because the law does not say that the amount must be paid for the application not to be proceeded with, only that the amount tendered is accepted (the aggregate of the outstanding amount and costs). By agreeing a payment plan which encompasses the outstanding amount and costs (costs which are properly referable to the enforcement process) the authority has accepted the amount and so there is no legal basis to proceed to obtain a liability order from the Magistrates' court.

Notwithstanding the lack of provision to proceed once the aggregate of the outstanding amount and costs has been agreed by the council, even if it were permissible, these costs and any other incurred would have further criteria to meet for the court to be satisfied that they were reasonably incurred.

R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin)

The Tottenham case provides in the judgment some general guidance regarding Council Tax Liability Order court costs and give clues (paragraphs 35 and 46) as to what should not be included in the costs and an approach that might be legitimate in respect of averaging the costs.

“It is clear that there must be a sufficient link between the costs in question and the process of obtaining the liability order. It would obviously be impermissible (for example) to include in the costs claimed any element referable to the costs of executing the order after it was obtained, or to the overall administration of council tax in the area concerned.” (Paragraph 35)

"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 double-counting, or of artificial inflation of costs, it may be a legitimate approach for a local authority to calculate and aggregate the relevant costs it has incurred in the previous year, and divide that up by the previous (or anticipated) number of summonses over twelve months so as to provide an average figure which could be levied across the board in "standard" cases.." (Paragraph 46)

However, the above does not go so far as to specify what the right types of costs and expenses are, plus the 1992 Council Tax Regulations (and associated guidance) also apply so any provisions in those capable of establishing what are "relevant costs" need taking into account. Crucially, the possibility that the approach of averaging the costs is conditional upon the right types of costs and expenses being taken into account and being mindful of the dangers of artificially inflating the costs.

Government guidance from 1993 and 2013 both provide within them that "the Court may wish to be satisfied that the amount claimed by way of costs in any individual case is no more than that reasonably incurred by the authority". They do so because the court is obliged to hear individually anyone wishing to raise a defence and regulation 35(1) of the Regulations provides that a single liability order may deal with one person and one amount.

The streamlining of the process, i.e. by hearing cases of all the defendants in a bulk application who decline the invitation to defend themselves would if the law was properly applied be met with a forfeiture of costs income because only expenditure which is common to every defendant may lawfully be included in a standard sum. For example, even if expenditure attributable to engaging with customers agreeing payment arrangements was not impermissible for the reasons discussed, they would not otherwise be deemed "relevant costs" to be included in the calculation because the expenditure is not common to every defendant but also because it would be impermissible to include in the costs any element referable to the overall administration of council tax in the area concerned (para 35, Tottenham judgment).

Expanding further on the concept of "reasonably incurred". If the costs are to be recharged lawfully to the customer it must have been reasonable for the council to have incurred them. Any expenditure recharged to the customer in respect of costs has not been reasonably incurred which is attributable to activity carried out by the council above what is necessary to secure the court order. Obtaining the order is merely a formality and it functions simply as the vehicle empowering the council to make use of a range of enforcement measures to pursue monies owed should it be necessary once it is in place, so with that in mind and that applications are made en masse, then the vast majority of costs typically claimed by local authorities are not necessary in a process which amounts to no more than seeking permission from the court.

Expenditure attributable to work carried out, which is clearly by its nature referable to the overall administration (in the area of council tax concerned) would not by virtue of it coinciding with when the complaint is in progress be sufficient to link it to the actual process of obtaining the liability order. This is separable from any that is permissible to be included in the costs claimed and would need omitting from the calculation because it would not be reasonable to expect those paying them to subsidise general administration or to be exploited as a means of funding revenues/recovery staff - and - because it is not common to every defendant.

Yours sincerely,

Helen Barker

Toby Bowler, Harlow District Council

I will not have access to my emails until Tuesday 9th June. Your email has not been forwarded. If your enquiry is urgent, please contact Andy Kemp or Paul Montgomery.

Kind regards

Toby Bowler

Systems Administrator and Project Officer
Revenues & Benefits
Tel: 01279 446587
Fax: 01279 446485
Alternative Contacts: Paul Montgomery – Senior Manager (Support & Development) – 01279 446249 Andy Kemp – IT Systems Administrator and Project Officer – 01279 446483

This E-Mail and any attachments are intended for the addressee only, and may contain confidential or privileged information. If you are not, or suspect you are not, the intended recipient, you must not copy, distribute or take any action in reliance on it. If you have received this E-Mail in error please notify us immediately and delete this E-Mail and any attachments. Please note that although this message has been checked for viruses, we cannot guarantee that this message or any attachment is virus free or has not been intercepted or amended. The information contained in this E-Mail may be subject to public disclosure under the Freedom of Information Act 2000. Unless the information is legally exempt from disclosure, the confidentiality of this E-Mail and your reply cannot be guaranteed. The views of the author may not necessarily reflect those of the Council. All communications sent to or from the Council may be subject to recording and / or monitoring in accordance with relevant legislation.

Toby Bowler, Harlow District Council

Dear Mrs Barker

Thank you for your comments which have been duly noted

Kind regards

Toby Bowler
Systems Administrator and Project Officer
Revenues & Benefits

Alternative Contacts:
Paul Montgomery – Senior Manager (Support & Development)
Andy Kemp – IT Systems Administrator and Project Officer

Visit our website www.harlow.gov.uk
Follow us on twitter @HarlowCouncil

Harlow Council, Civic Centre, The Water Gardens, Harlow, Essex, CM20 1WG

National coronavirus (COVID-19) situation

We are continuing to run essential services at this time and our service provision continues to be reviewed as government guidance changes. The latest service updates and information on how we are supporting residents and businesses at this time can be found on our coronavirus webpage www.harlow.gov.uk/coronavirus

The Civic Centre remains closed to the public, but you can still contact us by phone on 01279 446655 Monday to Friday 9am to 4.45pm. If you have been impacted by the coronavirus outbreak you can phone our Community Hub on 01279 927005. The hub can help you access food, prescriptions and help you find other support. The hub is open Monday to Friday 9am to 5pm and 10am to 1pm on Saturdays and Sundays and bank holidays.    

The latest government public health advice on what you need to do can be read on the government’s website https://www.gov.uk/coronavirus

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