Ensuring customers are not subject to unnecessary recovery action, additional costs or hardship

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Dear Newcastle upon Tyne City Council,

A council taxpayer who owes more than just the current year's liability runs the risk of incurring additional recovery costs through a further application for a liability order if payments which are intended for the current year's liability are allocated by the council's computer to the previous year's liability. This would most likely happen where a non specific payment is made and the computer software is set to automatically allocate these payments to the oldest year's debt.

Councils computer systems have the necessary flexibility to be set to allow non specific payments to be allocated to the arrears or the current year's liability.

I understand that the majority of billing authorities have their computer software set to ensure that their customers are not subject to unnecessary recovery action, additional costs or hardship, i.e. so non specific payments are allocated to the current year's liability.

How does Newcastle upon Tyne Council have its computer software set to deal with non specific payments. Current or oldest year's liability?

Yours faithfully,

Gwyn Worth

Freedom Of Information Requests Mailbox, Newcastle upon Tyne City Council

Reference: FOI 12478

Thank you for your request for information. We are dealing with it under the terms of the Freedom of Information Act 2000.

We have passed your request to relevant colleagues who will respond within 20 working days starting the working day after receipt of your request.

Regards
Freedom of Information Team

Blades, Denise, Newcastle upon Tyne City Council

Dear Gwyn Worth

 

Thank you for you freedom of information request to Newcastle City Council
reference 12478.  Your request and our response is shown below.

 

 

How does Newcastle upon Tyne Council have its computer software set to
deal with nonspecific payments. Current or oldest year's liability?

 

Where a customer informs us that they want their payments to be allocated
to specific years we will honour and process this.  Otherwise following
DCLG guidance we cannot auto allocate nonspecific payments to newest
council tax debt.

 

 

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Newcastle City Council, Room 17, Civic Centre, Newcastle upon Tyne, NE1
8QH

Phone: 0191 277 7666

Email: [1][Newcastle upon Tyne City Council request email]

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Kindest regards

 

Denise Blades IRRV (Tech)
Service Support Officer (Income & Recovery)

Revenues & Benefits
Newcastle City Council
Civic Centre
Barrass Bridge
Newcastle upon Tyne
NE1 8QH

Phone (External)       +44 (0)191 278 7878
Phone (Internal)         28896
Email                          [3][email address]
Website address      [4]www.newcastle,gov.uk

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Dear Ms Blades,

Thank you for your response. I consider Newcastle upon Tyne City Council has provided the information I requested, however, the purpose of this exercise was to ascertain whether or not the principles surrounding the appropriation of payments were being adhered to.

R v Miskin Lower Justices (1953)

It was held in R v Miskin Lower Justices, that where an amount obviously relates to a specific liability, it would be an unwarranted assumption to allocate the payment elsewhere.

If no instruction is given at the time of payment, then the council has a duty to allocate payment to the account which it is most beneficial to the debtor to reduce. That would be in the majority of cases the current liability if the consequences of allocating payment to the arrears meant that the customer was subject to unnecessary recovery action, additional costs etc.

I understand from the council's explanation that there are no measures in place to ensure that unspecified payments are allocated to the account which it is least burdensome for the debtor that the laws surrounding the appropriation of payments are not being complied with. If the laws of appropriation were being complied with, an unmatched payment allocated to the oldest debt (having the consequences of putting the current year's liability also in arrears) would be reallocated to the current year's liability on account of the circumstances implying that this was the debtor's intention (least burdensome for the debtor). If it appears I have misunderstood anything by what I have stated I would appreciate if you would correct me.

P.S.

Re; "following DCLG guidance we cannot auto allocate nonspecific payments to newest council tax debt"

I would like a link to the guidance if possible unless it is the same as below:

(Extract from QRC4 guidance notes)

'30. Receipts should be attributed to the oldest year in which debts are outstanding, and not to the current year unless the payment is specifically for the current year. If your receipts do not relate to 2016-17 DO NOT include them in this line, but refer to the notes for lines 7 and 8.'

Yours sincerely,

Gwyn Worth

Blades, Denise, Newcastle upon Tyne City Council

Dear Gwyn Worth

In response to your email for clarification and further to our original response:

The Council uses auto-functionality for high volumes of transactions in conjunction with system produced cash allocation and recovery reports.

The cash allocation parameter is set to allocate payments to the oldest debt first, in accordance with the DCLG guidance; the cash allocation and recovery reports, or 'pre-lists,' are used to monitor payments and identify accounts where an auto-allocated payment may need to be manually transferred to avoid any proposed recovery action and costs.

In exceptional cases, where the need for a manual intervention hasn't been identified, and where the debtor contacts us, we will allocate the payments as instructed and, if appropriate, withdraw the recovery action and costs.

Kind regards,

Denise Blades IRRV (Tech)
Service Support Officer (Income & Recovery) 

Phone (External)  0191 278 7878
Phone (Internal) 28896
E-mail [email address]
 
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Dear Ms Blades,

Thank you for clarifying your response. It is evident that the overall approach complies with appropriation principles, i.e. the circumstances are evaluated and payment allocated in the best interests of the customer.

However, I would like to know what the DCLG guidance says regarding setting the cash allocation parameter to allocate payments to the oldest debt first. But in case the guidance is the same as I quoted in my 3 November 2017 email it can not have been the DCLG's intention to require that billing authorities appropriate payments to previous year's liability where the customer's implied intention has been to allocate payment to the current year. The guidance merely emphasises the importance of attributing payments to the correct year when completing the Quarterly Return (QRC4), i.e. attributing payments which have been made in the current year (in respect of arrears) to the correct year so as not to misrepresent the "in year” Council Tax collection rates.

Yours sincerely,

Gwyn Worth

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