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

The request was successful.

Dear Kettering Borough 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 Kettering Borough 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

FOI, Kettering Borough Council

During the coronavirus pandemic, Kettering Borough Council will continue
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FOI, Kettering Borough Council

1 Attachment

Good Afternoon,

 

Please find attached Kettering Borough Councils response to your recent
FOI request

 

Kind Regards

 

Chloe Garland

Apprentice SMT Support

Kettering Borough Council

Municipal Offices

Bowling Green Road

Kettering

NN15 7QX

 

Tel: 01536 410333

DD: 01536 534260

 

[1]www.kettering.gov.uk

[2]www.twitter.com/KetteringBC

[3]www.facebook.com/thisiskettering

 

 

The contents of this email, including any attachments, may contain
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are present in this email.  The Council cannot accept liability for any
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Dear FOI,

Thank you for your response.

It does not constitute discretion if a decision of whether to apply it or not depends on being prompted by the customer. From the council's website and various other information I have seen the defendant incurs a £130.00 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, presumably in respect of officer time engaging with customers who choose to query their accounts, likely to arrange payment plans which would probably be conditioned upon the council obtaining a Liability Order (to secure the debt) adding a total £150.00 court costs comprising summons costs of £130.00 plus a further £20.00. This sum (£20.00) is added to the £130.00 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 they chose 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).

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 four 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 once the summons has been issued 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 £130.00 was not incurred by the council in respect of instituting the complaint;

3. the costs have been inflated to subsidise customers who elect to query their accounts, make payment arrangements, etc.; and

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

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

FOI, Kettering Borough Council

During the coronavirus pandemic, Kettering Borough Council will continue
to receive and respond to access to information requests as best we can. 

 

The handling of Freedom of Information (FOI) and Environmental Information
Regulation (EI) requests are, understandably, not a priority for the
council at this time. This is supported by the Information Commissioner’s
Office who have advised the public to expect delays to any FOI or EIR
request made to a public body as we divert our resources to help with the
crisis affecting the country. For more information on the Commissioner’s
message, please visit their [1]website.

 

We apologise for the inconvenience this may cause and thank you for your
understanding.

 

Find out all the latest information on coronavirus (COVID-19) — including
symptoms, how to avoid spreading germs and the dedicated 111 online
coronavirus service — by visiting [2]http://nhs.uk/coronavirus

 

 

The contents of this email, including any attachments, may contain
information which is confidential or privileged, and which is solely for
the recipient named above.  If you are not the intended recipient, please
send the email back to us, and immediately and permanently delete it.  Any
disclosure, copying, distribution or use of this email and any attachments
is strictly prohibited.
 
This email and any replies to it may be subject to disclosure under the
Freedom of Information Act 2000, the Environmental Information Regulations
2004 or Data Protection legislation, and its confidentiality cannot be
guaranteed.
 
Kettering Borough Council has taken reasonable steps to ensure no viruses
are present in this email.  The Council cannot accept liability for any
loss or damage arising from the use of this email or any attachments.

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FOI, Kettering Borough Council

1 Attachment

Dear Ms Barker

 

Please find attached the council’s response to your request for an
internal review.

 

Kind regards

 

 

Karen Sait

Executive Assistant (Information Governance)

 

SMT Support

Kettering Borough Council

Municipal Offices, Bowling Green Road, Kettering, NN15 7QX

 

Tel: 015369 410333

 

[1]www.kettering.gov.uk

 

 

 

The contents of this email, including any attachments, may contain
information which is confidential or privileged, and which is solely for
the recipient named above.  If you are not the intended recipient, please
send the email back to us, and immediately and permanently delete it.  Any
disclosure, copying, distribution or use of this email and any attachments
is strictly prohibited.
 
This email and any replies to it may be subject to disclosure under the
Freedom of Information Act 2000, the Environmental Information Regulations
2004 or Data Protection legislation, and its confidentiality cannot be
guaranteed.
 
Kettering Borough Council has taken reasonable steps to ensure no viruses
are present in this email.  The Council cannot accept liability for any
loss or damage arising from the use of this email or any attachments.

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Dear FOI,

Since I submitted my review 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.

Further to my 29 April email it is evident 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 before a summons is issued, 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 in respect of cases where the council deems it appropriate 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 substantial and disproportionate costs of £150.00 overall.

The £130.00 summons element of that sum actually covers the council's additional expenditure in respect of sending out reminders and officer time engaging with customers who query their accounts at this point. 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 latter case upon the council obtaining a Liability Order (to secure the debt).

Before the summons stage (final notice), a customer will be able 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 agrees 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 £150.00 court costs added to the debt and included in the payment plan.

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's website advises customers that 'if you don't pay or don't keep to an arrangement to pay, you will lose the right to pay in instalments and we will send you a Final Notice. The full year's council tax becomes due. The next stage is to issue you with a court summons.' I am making the assumption that the £130.00 element of 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

It is implicit on the council's website that when a summons is issued, but before the Court hearing, it is possible to agree a payment arrangement, implying that the Court will still be asked to grant a Liability Order to secure the debt and the payment plan will include the costs incurred in obtaining the Liability Order (£130.00 summons and £20.00 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).

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.

Below is a revised list of 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 £130.00 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 sincerely,

Helen Barker

FOI, Kettering Borough Council

During the coronavirus pandemic, Kettering Borough Council will continue
to receive and respond to access to information requests as best we can. 

 

The handling of Freedom of Information (FOI) and Environmental Information
Regulation (EI) requests are, understandably, not a priority for the
council at this time. This is supported by the Information Commissioner’s
Office who have advised the public to expect delays to any FOI or EIR
request made to a public body as we divert our resources to help with the
crisis affecting the country. For more information on the Commissioner’s
message, please visit their [1]website.

 

We apologise for the inconvenience this may cause and thank you for your
understanding.

 

Find out all the latest information on coronavirus (COVID-19) — including
symptoms, how to avoid spreading germs and the dedicated 111 online
coronavirus service — by visiting [2]http://nhs.uk/coronavirus

 

 

The contents of this email, including any attachments, may contain
information which is confidential or privileged, and which is solely for
the recipient named above.  If you are not the intended recipient, please
send the email back to us, and immediately and permanently delete it.  Any
disclosure, copying, distribution or use of this email and any attachments
is strictly prohibited.
 
This email and any replies to it may be subject to disclosure under the
Freedom of Information Act 2000, the Environmental Information Regulations
2004 or Data Protection legislation, and its confidentiality cannot be
guaranteed.
 
Kettering Borough Council has taken reasonable steps to ensure no viruses
are present in this email.  The Council cannot accept liability for any
loss or damage arising from the use of this email or any attachments.

References

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FOI, Kettering Borough Council

Dear Ms Barker

Your response below appears to relate to your concerns regarding the recovery of Council Tax and not in relation to your request for information. I regret I am unable to assist you with this.

I have passed your comments on to our Revenues Manager, however if you wish to contact the team directly, the email address is [email address]

Kind regards

Karen Sait
Executive Assistant
(Information Governance)

SMT Support
Kettering Borough Council
Municipal Offices
Bowling Green Road
Kettering
NN15 7QX

Telephone: 01536 535624

www.kettering.gov.uk

@KetteringBC

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