Bailiff fees unpaid by debtor for council tax recovery

Neil Gilliatt made this Freedom of Information request to Manchester City Council This request has been closed to new correspondence. Contact us if you think it should be reopened.

The request was successful.

Neil Gilliatt

Dear Manchester City Council,

In cases allocated to bailiffs for collection of council tax; do Manchester City Council pay the bailiff their fees for work carried out by them when the debtor does not because of direct settlement of the account with the authority?

If compensation to bailiffs is paid by the council due to debtors not paying bailiffs their fees; what are the annual figures for the years 2002 to date with respect to this payment?

Yours faithfully,

Neil Gilliatt

Christine Tzenevrakis, Manchester City Council

2 Attachments

Dear Mr Gilliatt,

Thank you for your request for information which has been logged to a
manager for investigation and reply. Please see below a copy of the
acknowledgement for your file.

Christine Tzenevrakis
Revenues and Benefits Complaints Coordinator

Manchester City Council
Revenues & Benefits Unit
Corporate Services Department
Alexandra House
Moss Lane East
Moss Side
Manchester
M15 5NX
External phone 0161 953 8400
Internal phone 811 8400
Fax 0161 274 7214
Text phone 0161 953 8301
email [email address]
www.manchester.gov.uk

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David Holden, Manchester City Council

FOI Request

In cases allocated to bailiffs for collection of council tax; do
Manchester City Council pay the bailiff their fees for work carried
out by them when the debtor does not because of direct settlement
of the account with the authority?

If compensation to bailiffs is paid by the council due to debtors
not paying bailiffs their fees; what are the annual figures for the
years 2002 to date with respect to this payment?

Manchester City Council (MCC) is one of eight Greater Manchester
authorities who contract collectively as part of a consortium to procure
the services of external bailiff companies.

Fee and renumeration arrangements are detailed in the contract and are
reviewed annually.

No sums are payable to bailiff companies in respect of uncollected fees in
cases where debtors pay outstanding sums to MCC . Neither is any
compensation paid in cases where debtors do not pay bailiffs their fees.

Under normal circumstances, in both these scenarios, bailiff companies
will continue to proceed against debtors for amounts of unpaid fees
outstanding on their accounts.

I trust this answers your questions.

My contact details are below if you require any further information.

Dave Holden
Revenues Contracts and Compliance Manager
Revenues and Benefits Unit
Corporate Services
Manchester City Council
PO Box 147
Manchester
M15 5TU

Tel: 0161 953 8349 (Internal 811 8349)
Fax: 0161 953 8228
[mobile number]
e-Mail: [email address]
Website : www.manchester.gov.uk

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Neil Gilliatt

Dear David Holden,

Thank you for your reply to my FOI request. I'm satisfied with both you answers to the questions relating to MCC's appointed bailiffs.

However, further to your statement:

"Under normal circumstances, in both these scenarios, bailiff companies will continue to proceed against debtors for amounts of unpaid fees outstanding on their accounts."

Could you please explain what constitutes "normal circumstances" and upon what grounds the bailiff company could continue to proceed against debtors for amounts of unpaid fees outstanding on their accounts, with attention to the following:

1) Whether the bailiff can legitimately remove goods for only his charges using the original council tax Liability Order, taking into consideration the following distinctions:

i) A levy made prior to the council receiving full payment (less bailiff fees), where no goods have yet been removed?

ii) A levy made after full payment (less bailiff fees) is made to the council?

2) If levying with the council tax liability order is not a legitimate option for MCC's appointed bailiffs to retrieve their fees; what legitimate means is available for them to accomplish this?

Yours sincerely,

Neil Gilliatt

David Holden, Manchester City Council

1 Attachment

Hi Neil, further to your latest questions, by the use of the term "normal
circumstances" I simply meant any account, already in the hands of our
external bailiff companies, where we would have no reason to treat the
debtor differently in accordance with our code of conduct. I have attached
a copy of this document to this e-mail reply for your information.

In both the instances that you mention I believe that our "Regulation 45"
covers cases where bailiffs continue to levy distress for fees
outstanding...it states:

Where a liability order has been made, the authority may levy the
appropriate amount by distress and sale of goods.

The appropriate amount for levy is the aggregate of an amount equal to any
outstanding sum covered by the liability order and a sum in respect of
charges in connection with distress.

So yes I am perfectly satisfied that the rules governing the levying of
distress for Council Tax permit goods to be removed in cases where amounts
of Council Tax are paid directly to the local authority but additional
amounts of enforcement fees incurred are not paid.

Again my contact details are below if you need any further information.

Dave Holden
Revenues Contracts and Compliance Manager
Revenues and Benefits Unit
Corporate Services
Manchester City Council
PO Box 147
Manchester
M15 5TU

Tel: 0161 953 8349 (Internal 811 8349)
Fax: 0161 953 8228
[mobile number]
e-Mail: [email address]
Website : www.manchester.gov.uk

Neil Gilliatt To David Holden
<[FOI #70049 email]> <[email address]>
cc
13/05/2011 12:44 Subject Re: Manchester City Council
- Bailiff Fees

Dear David Holden,
Thank you for your reply to my FOI request. I'm satisfied with both
you answers to the questions relating to MCC's appointed bailiffs.

However, further to your statement:
"Under normal circumstances, in both these scenarios, bailiff
companies will continue to proceed against debtors for amounts of
unpaid fees outstanding on their accounts."

Could you please explain what constitutes "normal circumstances"
and upon what grounds the bailiff company could continue to proceed
against debtors for amounts of unpaid fees outstanding on their
accounts, with attention to the following:

1) Whether the bailiff can legitimately remove goods for only his
charges using the original council tax Liability Order, taking into
consideration the following distinctions:

i) A levy made prior to the council receiving full payment (less
bailiff fees), where no goods have yet been removed?

ii) A levy made after full payment (less bailiff fees) is made to
the council?

2) If levying with the council tax liability order is not a
legitimate option for MCC's appointed bailiffs to retrieve their
fees; what legitimate means is available for them to accomplish
this?

Yours sincerely,
Neil Gilliatt

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Neil Gilliatt

Dear David Holden,

Thank you for your reply to my FOI request.

I believe your interpretation of "Regulation 45" would qualify your response under normal circumstances, i.e. where the debtor deals directly with the bailiff.

However, owing to the following item in regulation 45, it makes the task of answering this FOI more complicated:

45.—(3) If, before any goods are seized, the appropriate amount (including charges arising up to the time of the payment or tender) is paid or tendered to the authority, the authority shall accept the amount and the levy shall not be proceeded with.

Although the debtor may not have paid the bailiffs fees as in accordance with what is implied in item (3) above (including charges......); this is a completely different scenario, where the liability has been completely settled – no matter how it may have come about.

In light of the above, please could you provide an answer to my previous questions that goes beyond being satisfied by your interpretation of "Regulation 45"?

Yours sincerely,

Neil Gilliatt

David Holden, Manchester City Council

Hello again Neil, further to your latest question I think I need to
clarify a key point:

The legislation governing the administration and enforcement of Council
Tax dictates that any costs and fees (including bailiff fees) are
collected first prior to any Council Tax debt. So in cases where debtors
attempt to pay debts outstanding, exclusive of any bailiff fees incurred
up to that point, the effect of this is that the fees are paid in full and
part of the original liability order debt remains outstanding. This is why
bailiffs then proceed for an amount "equal to their fees", in fact they
are proceeding to collect the remainder of the original debt as the fees
have, by then, been paid in full.

So, unless payment in full is made of all Council Tax outstanding, plus
all costs and fees incurred up to the point when the payment is made, the
"liability" is never settled.

I hope this now clarifies the position with regard to enforcement action
continuing in such circumstances?

Dave Holden
Revenues Contracts and Compliance Manager
Revenues and Benefits Unit
Corporate Services
Manchester City Council
PO Box 147
Manchester
M15 5TU

Tel: 0161 953 8349 (Internal 811 8349)
Fax: 0161 953 8228
[mobile number]
e-Mail: [email address]
Website : www.manchester.gov.uk

Neil Gilliatt To David Holden
<[FOI #70049 email]> <[email address]>
cc
18/05/2011 15:17 Subject Re: Manchester City Council
- Bailiff Fees

Dear David Holden,
Thank you for your reply to my FOI request.
I believe your interpretation of "Regulation 45" would qualify your
response under normal circumstances, i.e. where the debtor deals
directly with the bailiff.

However, owing to the following item in regulation 45, it makes the
task of answering this FOI more complicated:

45.***(3) If, before any goods are seized, the appropriate amount
(including charges arising up to the time of the payment or tender)
is paid or tendered to the authority, the authority shall accept
the amount and the levy shall not be proceeded with.

Although the debtor may not have paid the bailiffs fees as in
accordance with what is implied in item (3) above (including
charges......); this is a completely different scenario, where the
liability has been completely settled *** no matter how it may have
come about.

In light of the above, please could you provide an answer to my
previous questions that goes beyond being satisfied by your
interpretation of "Regulation 45"?

Yours sincerely,
Neil Gilliatt

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Neil Gilliatt

Dear David Holden,

Thank you again for adding information to further clarify my FOI request.

It seems clear from the legislation you have explained that if this is adhered to, then Manchester City Council do in fact pay the bailiff their fees for work carried by them when the debtor does not because of direct settlement of the account with the authority.

In light of the various points which have been clarified throughout this process, could I ask for the original FOI request be amended or re-answered, now that a clearer understanding of the questions have been established?

And for the purpose of backing up your response, could I ask that some documented evidence is sent to me that relates to a case where these circumstances have occurred?

I fully appreciate that personal details relating to any case would need to be removed from any documents.

Yours sincerely,

Neil Gilliatt

David Holden, Manchester City Council

Morning Neil, I'm afraid that I'm a little confused by your latest
questions.

I can only reiterate that Manchester City Council only pays money to
external bailiff companies, who act as our agents in the collection and
enforcement of Council Tax, in the following circumstances.

1) We are required to pay VAT amounts on fees collected by them from
debtors. These amounts are recliamed as part of the VAT administration
process.

2) We, very occasionally, make recompense by way of compensation to them
in cases where they collect our debt and any associated costs in full and
subsequently the debtor proves not to have been liable to pay the Council
Tax. In these cases we refund the Council Tax paid and they refund the
associated recovery costs which we then reimburse.

At all times the external bailiff companies that we use are acting on our
behalf as our agents. Many local authorities use their own internal
bailiffs where all fees and charges for bailiff activity simply are
collected by the LA's themselves as part of the amounts due. The fees
incurred in the enforcement process are our fees. Part of our contractual
arrangements with the bailiff companies detail the fact that we allow the
bailiffs to retain the enforcement fees themselves and to collect these
first in cases where part payments are made by debtors.

Dave Holden
Revenues Contracts and Compliance Manager
Revenues and Benefits Unit
Corporate Services
Manchester City Council
PO Box 147
Manchester
M15 5TU

Tel: 0161 953 8349 (Internal 811 8349)
Fax: 0161 953 8228
[mobile number]
e-Mail: [email address]
Website : www.manchester.gov.uk

Neil Gilliatt To David Holden
<[FOI #70049 email]> <[email address]>
cc
19/05/2011 13:59 Subject Re: Manchester City Council
- Bailiff Fees

Dear David Holden,
Thank you again for adding information to further clarify my FOI
request.

It seems clear from the legislation you have explained that if this
is adhered to, then Manchester City Council do in fact pay the
bailiff their fees for work carried by them when the debtor does
not because of direct settlement of the account with the authority.

In light of the various points which have been clarified throughout
this process, could I ask for the original FOI request be amended
or re-answered, now that a clearer understanding of the questions
have been established?

And for the purpose of backing up your response, could I ask that
some documented evidence is sent to me that relates to a case where
these circumstances have occurred?

I fully appreciate that personal details relating to any case would
need to be removed from any documents.

Yours sincerely,
Neil Gilliatt

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Neil Gilliatt

Dear David Holden,

Thank you once again for your latest explanation to MCC's procedures regarding bailiff contracts. However, I feel I'm either taking part in the krypton factor or completing an entry exam for a position as chief decipherer of code with some intelligence service.

Can I begin by eliminating a couple of items from consideration, those being the VAT payments as I'm aware these can be claimed back; the other being the compensation as a result of MCC incorrectly sending cases for enforcement. Disregarding these two items it is clear that MCC do not make any payments to external bailiffs.

There are four aspects that are causing me most difficulty but which also may be the key in getting an understanding of your explanations.

i) The Council Tax Regulations, S.I. 613/1992 regulation 52(4) which states:

"Where a step is taken for the recovery of an outstanding sum which is or forms part of an amount in respect of which a liability order has been made and under which additional costs or charges with respect to the step are also recoverable in accordance with this Part, any sum recovered thereby which is less than the aggregate of the amount outstanding and such additional costs and charges shall be treated as discharging first the costs and charges, the balance (if any) being applied towards the discharge of the outstanding sum."

ii) The fees incurred in the enforcement process are the council's fees which may explain, in conjunction with iii), why the council do not pay fees to bailiffs despite S.I. 613/1992 regulation 52(4) giving the impression that this should be the case.

iii) Part of your contractual arrangements with the bailiff companies detail the fact that you allow the bailiffs to retain the enforcement fees themselves and to collect these first in cases where part payments are made by debtors.

iv) No sums are payable to bailiff companies in respect of uncollected fees in cases where debtors pay outstanding sums to MCC.

I will give my interpretation of the above information which I feel will be the best way of demonstrating whether or not I've grasped what you're saying:

1) There is no obligation for MCC, owing to Regulation 52(4) of S.I. 613/1992, to pay any fees to their external bailiffs when MCC receive payment directly from debtors. The is because the legislation does not refer to external bailiff fees; in fact external bailiff fees do not exist in the collection of council tax debt, they're always the council's enforcement fees.

2) The contractual arrangements outlined in iii) above, are only applicable when collection is actually made by the bailiff, i.e. the bailiff may retain the council's fees even when only part of the debt is collected. This does not extend to the council passing onto the bailiff the council's enforcement fees when debtors pay directly to them.

3) Because no sums are payable to bailiff companies in respect of uncollected fees in cases where debtors pay outstanding sums to MCC; the council do not pay the bailiff those fees equivalent to the council's, even in situations where the debtor pays to the council an amount equal to the debt and the council's enforcement fees. Though in such circumstances, the debtors liability would be completely settled and the bailiff would not be allowed (lawfully) to pursue the debtor for the council's enforcement fees he would normally be entitled to if he had collected himself.

4) Owing to regulation 52(4), any payment, regardless to whom it is paid, if it does not completely cover the combined total of the outstanding debt plus the council's fees, the liability will not be settled and therefore the bailiff will be allowed to pursue the debt under the liability order.

If I have understood your explanation fully and item 4 above is correct, could you for the purpose of clarifying this point, provide some documented examples which relate to cases where the original debt has been paid to the council (less council's enforcement fees) and the liability order has remained active for the bailiff firm to levy goods/enforce payment?

I fully appreciate that personal details relating to any case would need to be removed from any documents for data protection purposes.

Yours sincerely,

Neil Gilliatt

David Holden, Manchester City Council

Afternoon Neil, please see my comments (in bold, just for clarity, I'm not
shouting!) added in between the text of your latest comments.

I hope these comments serve to further clarify the position which you have
clearly now fully understood.

Thanks...

Dave Holden
Revenues Contracts and Compliance Manager
Revenues and Benefits Unit
Corporate Services
Manchester City Council
PO Box 147
Manchester
M15 5TU

Tel: 0161 953 8349 (Internal 811 8349)
Fax: 0161 953 8228
[mobile number]
e-Mail: [email address]
Website : www.manchester.gov.uk

Neil Gilliatt To David Holden
<[FOI #70049 email]> <[email address]>
cc
23/05/2011 08:57 Subject Re: Manchester City Council
- Bailiff Fees

Dear David Holden,
Thank you once again for your latest explanation to MCC's
procedures regarding bailiff contracts. However, I feel I'm either
taking part in the krypton factor or completing an entry exam for a
position as chief decipherer of code with some intelligence
service.

Can I begin by eliminating a couple of items from consideration,
those being the VAT payments as I'm aware these can be claimed
back; the other being the compensation as a result of MCC
incorrectly sending cases for enforcement. Disregarding these two
items it is clear that MCC do not make any payments to external
bailiffs.

Yes absolutely correct except in one rare instance which I should have
mentioned in my previous reply...please see my comments linked to your
point 1) below. Apologies that I simply forgot to mention this in my
previous e-mail.

There are four aspects that are causing me most difficulty but
which also may be the key in getting an understanding of your
explanations.

i) The Council Tax Regulations, S.I. 613/1992 regulation 52(4)
which states:

"Where a step is taken for the recovery of an outstanding sum which
is or forms part of an amount in respect of which a liability order
has been made and under which additional costs or charges with
respect to the step are also recoverable in accordance with this
Part, any sum recovered thereby which is less than the aggregate of
the amount outstanding and such additional costs and charges shall
be treated as discharging first the costs and charges, the balance
(if any) being applied towards the discharge of the outstanding
sum."

Yes if any amount is paid, less than the total amount outstanding
(inclusive of all fees) then fees and charges are paid off first before
the original Council Tax debt.

ii) The fees incurred in the enforcement process are the council's
fees which may explain, in conjunction with iii), why the council
do not pay fees to bailiffs despite S.I. 613/1992 regulation 52(4)
giving the impression that this should be the case.

Yes agreed...all fees and charges are our fees in law both those that are
prescribed and those that are simply stated as being "reasonable" in the
legislation. All fees and charges added by our external bailiff companies
must be agreed by MCC and we operate a "fixed fee schedule" that all
bailiff companies who work for us must adhere to.

iii) Part of your contractual arrangements with the bailiff
companies detail the fact that you allow the bailiffs to retain the
enforcement fees themselves and to collect these first in cases
where part payments are made by debtors.

Yes this is exactly what our contracts specify.

iv) No sums are payable to bailiff companies in respect of
uncollected fees in cases where debtors pay outstanding sums to
MCC.

Again yes perfectly correct.

I will give my interpretation of the above information which I feel
will be the best way of demonstrating whether or not I've grasped
what you're saying:

1) There is no obligation for MCC, owing to Regulation 52(4) of
S.I. 613/1992, to pay any fees to their external bailiffs when MCC
receive payment directly from debtors. The is because the
legislation does not refer to external bailiff fees; in fact
external bailiff fees do not exist in the collection of council tax
debt, they're always the council's enforcement fees.

Yes that is exactly what happens. On the rare occasions where we are asked
for a "full and final settlement" figure to clear a debt by a debtor whose
account is with a firm of bailiffs, we will contact the bailiff company,
add on the fees outstanding, collect them and then reimburse them back to
the bailiff. Normally we instruct the debtor to contact, and pay, the
bailiff direct but there are rare occasions when we deem it to be in
everyone's best interests to collect the money ourselves (such as when the
debtor has come into our customer contact centre in person to clear the
account).

2) The contractual arrangements outlined in iii) above, are only
applicable when collection is actually made by the bailiff, i.e.
the bailiff may retain the council's fees even when only part of
the debt is collected. This does not extend to the council passing
onto the bailiff the council's enforcement fees when debtors pay
directly to them.

Yes although see my comments to your point 1 above...in this (rare!)event
we collect the fees and pass them back to the bailiff company by way of a
cheque. This probably happens on less than a dozen occasions per year
despite the fact that we issue in the region of 30,000 cases to bailiffs.

3) Because no sums are payable to bailiff companies in respect of
uncollected fees in cases where debtors pay outstanding sums to
MCC; the council do not pay the bailiff those fees equivalent to
the council's, even in situations where the debtor pays to the
council an amount equal to the debt and the council's enforcement
fees. Though in such circumstances, the debtors liability would be
completely settled and the bailiff would not be allowed (lawfully)
to pursue the debtor for the council's enforcement fees he would
normally be entitled to if he had collected himself.

Yes if all sums due are paid to MCC (inclusive of any bailiff fees
incurred to date)then enforcement action must cease immediately.

4) Owing to regulation 52(4), any payment, regardless to whom it is
paid, if it does not completely cover the combined total of the
outstanding debt plus the council's fees, the liability will not be
settled and therefore the bailiff will be allowed to pursue the
debt under the liability order.

Exactly correct.

If I have understood your explanation fully and item 4 above is
correct, could you for the purpose of clarifying this point,
provide some documented examples which relate to cases where the
original debt has been paid to the council (less council's
enforcement fees) and the liability order has remained active for
the bailiff firm to levy goods/enforce payment?

Example:

Council Tax debt **1000.00
Liability order court fees **74.00
Total debt passed to bailiff for collection **1074.00
Fees incurred for first and second bailiff visits **42.50
Total to pay **1116.50

Debtor pays **1074.00 in an attempt to stop bailiff action, direct to MCC

MCC notifies bailiff company of a "direct payment" of **1074.00.

Bailiff company will continue to enforce payment of **42.50...plus any
subsequent further bailiff costs (for example a levy fee where walking
possession of goods is taken)if payment of the outstanding balance is not
made.

I fully appreciate that personal details relating to any case would
need to be removed from any documents for data protection purposes.

Yours sincerely,
Neil Gilliatt

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