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

The request was successful.

Dear Stratford on Avon 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 Stratford on Avon 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

Info, Stratford on Avon District Council

 

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Stratford on Avon District Council

Processing FOI request
FOI #14952
We have started processing your FOI request, a response may take up to 20
working days. If you have not received a response after 08/06/2020 please
contact the council ([email address]).

Your FOI reference number is #14952

Regards
Freedom of Information Officer
Stratford-on-Avon District Council

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Stratford on Avon District Council

FOI Response #14952
FOI #14952
Dear Helen Barker

Further to your request, please see answers to your questions below:

Q1. Does Stratford on Avon 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)

- Yes

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

- level of debt, circumstances of customer if known, any correspondence
pending etc

If you are dissatisfied with the handling of your request, you have the
right to ask for an internal review. An internal review request should be
submitted in writing within 40 working days of receiving the original
reply and should be addressed to:
Phil Grafton, Monitoring Officer, Stratford-on-Avon District Council,
Elizabeth House, Church Street, Stratford-upon-Avon CV37 6HX.

If you are not content with the outcome of the internal review, you have
the right to apply directly to the Information Commissioner for a
decision. The Information Commissioner can be contacted at:
Information Commissioner's Office,
Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.

Regards
Freedom of Information Officer
Stratford-on-Avon District Council

show quoted sections

This e-mail is confidential and may contain legally privileged
information. You should not disclose its contents to any other person. If
you are not the intended recipient, please notify the sender immediately.

Whilst the Council has taken every reasonable precaution to minimise the
risk of computer software viruses, it cannot accept liability for any
damage which you may sustain as a result of such viruses. You should carry
out your own virus checks before opening the e-mail (and/or any
attachments).

Unless expressly stated otherwise, the contents of this e-mail represent
only the views of the sender and do not impose any legal obligation upon
the Council or commit the Council to any course of action.

Please visit www.stratford.gov.uk/privacy to view our privacy notice.

Dear Stratford on Avon District Council,

Thank you for your response. On a related matter I would like it clarifying what the council's procedure is regarding recovery. For example, I would like it confirming the level of costs and at what stage of recovery they are applied. Also whether an arrangement is possible at final notice or after the summons stage and whether this avoids costs/proceeding to liability order. I have been unable to find this specific information on the council's website nor have I been able to find a publicly available debt recovery policy.

Yours faithfully,

Helen Barker

Info, Stratford on Avon District Council

 

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correspondence and you will receive an official response in due course.

 

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Customer Services Centre
Stratford on Avon District Council, Elizabeth House, Church Street,
Stratford upon Avon, Warwickshire, CV37 6HX
Switchboard +44 (0)1789 267575, email [1][Stratford on Avon District Council request email], web
[2]www.stratford.gov.uk

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Stratford on Avon District Council

Processing Freedom of Information Request
Freedom of Information #20738
Dear Helen Barker,

We have started processing your Freedom of Information request. A response
may take up to 20 working days. If you have not received a response after
05/11/2020 , please contact the council ([email address]).

Your Freedom of Information reference number is #20738.

Regards,

Freedom of Information Officer
Stratford-on-Avon District Council

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Stratford on Avon District Council

Freedom of Information Response
#20738
Dear Helen Barker

Further to your request, costs are £85 and are incurred at the issue of a
summons. Arrangements can be made at any stage of recovery . However once
a Summons is issued the arrangement would include the anticipated costs of
£85.00 and a liability order would still be requested, but just held on
file if the arrangement is maintained.

If you are dissatisfied with the handling of your request, you have the
right to ask for an internal review. An internal review request should be
submitted in writing within 40 working days of receiving the original
reply and should be addressed to:

Phil Grafton, Monitoring Officer,
Stratford-on-Avon District Council,
Elizabeth House,
Church Street,
Stratford-upon-Avon,
Warwickshire
CV37 6HX.

Regards,

Freedom of Information Officer
Stratford-on-Avon District Council

show quoted sections

Dear Stratford on Avon District Council,

Thank you for your response. Since I submitted my request a number of anomalies have come to light regarding the enforcement procedure in the area concerned. However, I do not wish to pursue this, though the council might want to reconsider its actions regarding the recovery of Council Tax in light of the issues. Note later on under the heading 'NO LEGAL BASIS TO PURSUE LIABILITY ORDER ONCE AN AMOUNT AGREED' the point discussed is not a discretionary matter. I suggest this and the other points raised are considered by the Monitoring Officer, but that is of course a matter for the council.

It does not constitute discretion if a decision of whether to apply it or not depends on being prompted by the customer, parameters being agreed in advance relating to the outstanding monetary value of a customer's account or other information that can be input so the council tax processing system can detect it when running the complaint list. Discretion could only be appropriately applied at a stage when the summons is normally requested, i.e. when all the relevant circumstances are known about the customer's account at that particular time.

The council's response indicates 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, primarily to make payment arrangements which need to be monitored after the debt is secured by a liability order. The actual process of running the complaint list and the summonses is automated for which the defendant incurs disproportionate costs.

It has been confirmed that the defendant incurs an £85.00 sum in respect of the council requesting the issue of a summons (an automated procedure). However, that sum will actually cover the council's additional expenditure in respect of sending out reminders and officer time engaging with customers who query their accounts at these points. Also the same for final notices (see below) and after a summons has been issued in respect of customers who query their accounts to arrange payment plans which are conditioned, in the case of the latter, upon the council obtaining a Liability Order (to secure the debt). The £85.00 sum is added to the accounts of all customers who have not paid the total amount outstanding of their liability, whether choosing to query their accounts or not and those who have settled their accounts before a liability order is applied for. This is 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).

Before the summons stage (final notice), it will be possible for a customer to avoid summons costs, for example, a taxpayer who has lost her right to pay by instalments may have them effectively re-instated if she manages to agree a payment arrangement. 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 by that time she would have had the total £85.00 court costs added to the debt and included in the payment plan.

So the costs in reality cover the council's expenditure (additional to the issue of the summons) attributable to before the summons is requested, both after the summons is requested but before the liability order application and after the liability order has been obtained in respect of officer time engaging with customers who agree to enter into payment arrangements. The costs must therefore with absolute certainty cover the general administration of the council tax and enforcement departments.

RELEVANT LEGISLATION AND CASE LAW

I understand that the council must adhere to the Council Tax (Administration and Enforcement) Regulations 1992 and also be mindful of all established case law regarding the area concerned.

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)

The council has confirmed that the £85.00 costs are incurred at the issue of a summons. I 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 has effectively said that when a summons is issued, but before the Court hearing, it is possible to agree a payment arrangement but that the Court will still be asked to grant a Liability Order and that the payment plan will include the £85.00 costs incurred in obtaining the Liability Order.

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.

There is also the anomaly that the customers who to the greatest degree drive the level of activity are ironically avoiding the recovery process and not incurring any costs. These are generally those customers who have negotiated their instalments being re-instated by agreeing special payment arrangements, whilst customers who settle their debt without causing additional work are left subsidising this expenditure when bizarrely none is incurred in connection with their summonses.

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).

Looking now just at general expenditure incurred in dealing with customer's queries in the context that all the £85.00 costs are applied on issue of the summons so that the same sum is incurred by customers whether or not their cases proceed to court. For those customers whose cases do not proceed, their costs are artificially inflated because the amount they're charged requires to be a lesser sum than the £85.00 total claimed to have been incurred by the council to obtain the order which is referable to regulation 34(7). The costs claims in connection with issuing the summons, which are relevant for these customers, are provided in regulation 34(5). The Tottenham judgment reinforces this in para 46, warning that a standard sum would require the right types of expenses being taken into account with due consideration given to the dangers of double-counting, or of artificial inflation and in para 50 saying that "what matters is that the costs that it does decide to claim are properly referable to the enforcement process". So, even if the work was not referable to the overall administration of council tax (which arguably it is) and considered referable to 'the right types of costs and expenses', the expenditure attributable to dealing with those customer's queries who subsequently pay to the authority the aggregate of the outstanding amount and costs before the court hearing would have paid an element of front loaded costs, i.e. which were not properly referable to the enforcement process.

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.

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 restricted to no more than a handful. However, there are seven 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 is 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 £85.00 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 to subsidise expenditure incurred by the council in respect of potential applications to the court but which are not made by virtue of negotiations that have taken place to reinstate instalments;

6. 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

7. the costs in general have been inflated to fund the running of the council tax and enforcement departments and/or the overall administration of council tax in the area concerned.

Yours faithfully,

Helen Barker

Info, Stratford on Avon District Council

 

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Customer Services Centre
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Stratford upon Avon, Warwickshire, CV37 6HX
Switchboard +44 (0)1789 267575, email [1][Stratford on Avon District Council request email], web
[2]www.stratford.gov.uk

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Info, Stratford on Avon District Council

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--------------------------------------------------------------------------

From: Helen Barker <[FOI #663882 email]>
Sent: 11 October 2020 09:57:01
To: Info
Subject: Re: Freedom of Information #20738 Response
 
Dear Stratford on Avon District Council,

Thank you for your response. Since I submitted my request a number of
anomalies have come to light regarding the enforcement procedure in the
area concerned. However, I do not wish to pursue this, though the council
might want to reconsider its actions regarding the recovery of Council Tax
in light of the issues. Note later on under the heading 'NO LEGAL BASIS TO
PURSUE LIABILITY ORDER ONCE AN AMOUNT AGREED' the point discussed is not a
discretionary matter. I suggest this and the other points raised are
considered by the Monitoring Officer, but that is of course a matter for
the council.

It does not constitute discretion if a decision of whether to apply it or
not depends on being prompted by the customer, parameters being agreed in
advance relating to the outstanding monetary value of a customer's account
or other information that can be input so the council tax processing
system can detect it when running the complaint list. Discretion could
only be appropriately applied at a stage when the summons is normally
requested, i.e. when all the relevant circumstances are known about the
customer's account at that particular time.

The council's response indicates 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, primarily to make payment arrangements which need
to be monitored after the debt is secured by a liability order. The actual
process of running the complaint list and the summonses is automated for
which the defendant incurs disproportionate costs.

It has been confirmed that the defendant incurs an £85.00 sum in respect
of the council requesting the issue of a summons (an automated procedure).
However, that sum will actually cover the council's additional expenditure
in respect of sending out reminders and officer time engaging with
customers who query their accounts at these points. Also the same for
final notices (see below) and after a summons has been issued in respect
of customers who query their accounts to arrange payment plans which are
conditioned, in the case of the latter, upon the council obtaining a
Liability Order (to secure the debt). The £85.00 sum is added to the
accounts of all customers who have not paid the total amount outstanding
of their liability, whether choosing to query their accounts or not and
those who have settled their accounts before a liability order is applied
for. This is 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).

Before the summons stage (final notice), it will be possible for a
customer to avoid summons costs, for example, a taxpayer who has lost her
right to pay by instalments may have them effectively re-instated if she
manages to agree a payment arrangement. 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 by that time she would have had the total £85.00 court costs added to
the debt and included in the payment plan.

So the costs in reality cover the council's expenditure (additional to the
issue of the summons) attributable to before the summons is requested,
both after the summons is requested but before the liability order
application and after the liability order has been obtained in respect of
officer time engaging with customers who agree to enter into payment
arrangements. The costs must therefore with absolute certainty cover the
general administration of the council tax and enforcement departments.

RELEVANT LEGISLATION AND CASE LAW

I understand that the council must adhere to the Council Tax
(Administration and Enforcement) Regulations 1992 and also be mindful of
all established case law regarding the area concerned.

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)

The council has confirmed that the £85.00 costs are incurred at the issue
of a summons. I 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 has effectively said that when a summons is issued, but before
the Court hearing, it is possible to agree a payment arrangement but that
the Court will still be asked to grant a Liability Order and that the
payment plan will include the £85.00 costs incurred in obtaining the
Liability Order.

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.

There is also the anomaly that the customers who to the greatest degree
drive the level of activity are ironically avoiding the recovery process
and not incurring any costs. These are generally those customers who have
negotiated their instalments being re-instated by agreeing special payment
arrangements, whilst customers who settle their debt without causing
additional work are left subsidising this expenditure when bizarrely none
is incurred in connection with their summonses.

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).

Looking now just at general expenditure incurred in dealing with
customer's queries in the context that all the £85.00 costs are applied on
issue of the summons so that the same sum is incurred by customers whether
or not their cases proceed to court. For those customers whose cases do
not proceed, their costs are artificially inflated because the amount
they're charged requires to be a lesser sum than the £85.00 total claimed
to have been incurred by the council to obtain the order which is
referable to regulation 34(7). The costs claims in connection with issuing
the summons, which are relevant for these customers, are provided in
regulation 34(5). The Tottenham judgment reinforces this in para 46,
warning that a standard sum would require the right types of expenses
being taken into account with due consideration given to the dangers of
double-counting, or of artificial inflation and in para 50 saying that
"what matters is that the costs that it does decide to claim are properly
referable to the enforcement process". So, even if the work was not
referable to the overall administration of council tax (which arguably it
is) and considered referable to 'the right types of costs and expenses',
the expenditure attributable to dealing with those customer's queries who
subsequently pay to the authority the aggregate of the outstanding amount
and costs before the court hearing would have paid an element of front
loaded costs, i.e. which were not properly referable to the enforcement
process.

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.

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 restricted to no more than a handful. However, there are seven
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 is 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 £85.00 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 to subsidise expenditure incurred by the
council in respect of potential applications to the court but which are
not made by virtue of negotiations that have taken place to reinstate
instalments;

6. 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

7. the costs in general have been inflated to fund the running of the
council tax and enforcement departments and/or the overall administration
of council tax in the area concerned.

Yours faithfully,

Helen Barker

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