Exercising discretion when applying to the court for a Council Tax Liability Order
Dear Brentwood 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 Brentwood Borough Council exercise discretion before proceeding to the Magistrates' court to seek permission to enforce payment (it may be an automated process)
Q2. If yes to (1) what factors are taken into consideration
Yours faithfully,
Helen Barker
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Dear Brentwood Borough Council,
I have been alerted to the fact that my request could have been clearer. In order to remove any ambiguity my request is amended as follows:
Q1. Does Brentwood 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
Many thanks for your FOI request. Please see the answers to your questions below.
Q1. Does Brentwood 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)
Yes, Brentwood Council exercises all reasonable caution when issuing any documentation in relation the Regulation 34(2) of the Council Tax (Administration and Enforcement) Regulations 1992.
Q2. If yes to (1) what factors are taken into consideration.
Adherence to a minimum level of arrears balance.
Special payment arrangements are agreed prior to the issue of the Summons.
Payments received are allocated to in-year instalments unless a special payment plan is in place for previous years arrears.
Cases where outstanding correspondence is waiting to be processed such as, owner/occupiers vacating a dwelling along with applications for exemptions, disregards and or discounts are not progressed until the matter has been finalised and only then where appropriate.
Cases where a new application for council tax reduction (LCTS) has been received and awaiting processing are not progressed until the matter has been finalised and only then where appropriate..
Where a vulnerability within the household has been made aware to the Council.
Signposting to free debt advice.
Signposting to help with regards possible entitlement to discounts, disregards, exemption and council tax reduction (LCTS) Advice on applying for Exceptional hardship payment (EHP) and how to apply for this.
Advice on applying for Discretionary hardship payment (DHP) for help with rent arrears.
Back office debt recovery team, available by telephone, email or letter who provide specialist advice and support, take payments, agree payment plans and set up the Direct Debit facility.
Customer Services Contact centre who are available to provide early stage debt advice, take payments, set-up Direct Debit payment facility.
If you are unhappy with the way your request for Information has been handled you may request a review by writing to:
The FOI Co-ordinator
Brentwood Borough Council
Town Hall
Ingrave Road
Brentwood
Essex
CM15 8AY
If you remain dissatisfied with the handling of your request you have a right to appeal to the Information Commissioner at:
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Cheshire
SK9 5AF
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Or 01625 54 57 45
Website: https://ico.org.uk/
Zöe Borman | Governance & Member Support Officer| Brentwood Borough Council
: 01277 312736 :: [email address]
Dear Zoe Borman,
Thank you for your response in which it is stated that 'special payment arrangements are agreed prior to the issue of the Summons'. However, the council's website states that 'the Council will consider a Special Payment Arrangement including all costs' once a summons has been issued 'if you are unable to pay this [balance] in full, before the hearing date'. I also note from the council's most recently available breakdown of costs (see later) that the Liability Order costs are £30.00 which are additional to the costs already incurred by the customer in respect of issuing the summons (£65.00).
These costs are incurred at a point after the customer has tendered payment. Therefore, the cost attributable to this activity could not lawfully be included in the costs claimed because expenditure may only be recharged that has been incurred by the authority up to the time of the payment or tender and clearly resources called upon by engaging staff in the matter would occur after payment was tendered. Expenditure incurred by the authority after that point falls on the wrong side of line to be referable to the summons and would only be lawfully recharged (if eligible) in respect of those who had not paid or tendered to the authority the aggregate of the outstanding amount and costs before the court hearing because only those customers may be proceeded against further and incur additional costs.
To be clear, it is not just the costs in these circumstances which are artificially inflated by either front loading or being charged where there is no legal basis at all which is a point of contention. The consequences are that for all those cases against whom the council proceeds in order to secure the debt once an amount has been agreed (the payment arrangement), the action is unlawful because regulation 34 of SI 1992/613 provides that the authority shall accept the amount and the application shall not be proceeded with in these circumstances.
Paragraph 34(5) of the regulations, are as follows (with emphasis):
“(5) If, after a summons has been issued in accordance with paragraph (2) but before the application is heard, there is paid or TENDERED to the authority an amount equal to the aggregate of—
(a) the sum specified in the summons as the sum outstanding or so much of it as remains outstanding (as the case may be); and
(b) a sum of an amount equal to the costs reasonably incurred by the authority in connection with the application UP TO THE TIME OF THE payment or TENDER,
the authority shall accept the amount and the application shall not be proceeded with.”
The authority could not defend its actions on the grounds that an arrangement does not constitute payment therefore it is entitled to obtain a liability order to secure the debt because the law does not say that the amount must be paid for the application not to be proceeded with, only that the amount tendered is accepted (the aggregate of the outstanding amount and costs). By agreeing a payment plan which encompasses the outstanding amount and costs (costs which are properly referable to the enforcement process) the authority has accepted the amount and so there is no legal basis to proceed to obtain a liability order from the Magistrates' court.
Notwithstanding the lack of provision to proceed once the aggregate of the outstanding amount and costs has been agreed by the council, even if it were permissible, these costs and any other incurred would have further criteria to meet for the court to be satisfied that they were reasonably incurred.
R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin) provides in the judgment some general guidance regarding Council Tax Liability Order court costs and give clues (paragraphs 35 and 46) as to what should not be included in the costs and an approach that might be legitimate in respect of averaging the costs.
“It is clear that there must be a sufficient link between the costs in question and the process of obtaining the liability order. It would obviously be impermissible (for example) to include in the costs claimed any element referable to the costs of executing the order after it was obtained, or to the overall administration of council tax in the area concerned.” (Paragraph 35)
"In principle, therefore, provided that the right types of costs and expenses are taken into account, and provided that due consideration is given to the dangers of double-counting, or of artificial inflation of costs, it may be a legitimate approach for a local authority to calculate and aggregate the relevant costs it has incurred in the previous year, and divide that up by the previous (or anticipated) number of summonses over twelve months so as to provide an average figure which could be levied across the board in "standard" cases.." (Paragraph 46)
However, the above does not go so far as to specify what the right types of costs and expenses are, plus the 1992 Council Tax Regulations (and associated guidance) also apply so any provisions in those capable of establishing what are "relevant costs" need taking into account. Crucially, the possibility that the approach of averaging the costs is conditional upon the right types of costs and expenses being taken into account and being mindful of the dangers of artificially inflating the costs.
Government guidance from 1993 and 2013 both provide within them that "the Court may wish to be satisfied that the amount claimed by way of costs in any individual case is no more than that reasonably incurred by the authority". They do so because the court is obliged to hear individually anyone wishing to raise a defence and regulation 35(1) of the Regulations provides that a single liability order may deal with one person and one amount.
The streamlining of the process, i.e. by hearing cases of all the defendants in a bulk application who decline the invitation to defend themselves would if the law was properly applied be met with a forfeiture of costs income because only expenditure which is common to every defendant may lawfully be included in a standard sum. For example, even if expenditure attributable to engaging with customers agreeing payment arrangements was not impermissible for the reasons discussed, they would not otherwise be deemed "relevant costs" to be included in the calculation because the expenditure is not common to every defendant but also because it would be impermissible to include in the costs any element referable to the overall administration of council tax in the area concerned (para 35, Tottenham judgment).
Expanding further on the concept of "reasonably incurred". If the costs are to be recharged lawfully to the customer it must have been reasonable for the council to have incurred them. Any expenditure recharged to the customer in respect of costs has not been reasonably incurred which is attributable to activity carried out by the council above what is necessary to secure the court order. Obtaining the order is merely a formality and it functions simply as the vehicle empowering the council to make use of a range of enforcement measures to pursue monies owed should it be necessary once it is in place, so with that in mind and that applications are made en masse, then the vast majority of costs typically claimed by local authorities are not necessary in a process which amounts to no more than seeking permission from the court.
Expenditure attributable to work carried out, which is clearly by its nature referable to the overall administration (in the area of council tax concerned) would not by virtue of it coinciding with when the complaint is in progress be sufficient to link it to the actual process of obtaining the liability order. This is separable from any that is permissible to be included in the costs claimed and would need omitting from the calculation because it would not be reasonable to expect those paying them to subsidise general administration or to be exploited as a means of funding revenues/recovery staff and because it is not common to every defendant.
BREAKDOWN OF COSTS
For the court to properly consider the breakdown it would be necessary for it to contain sufficient information as to how the figure was arrived at, and what costs it represents. It would also need to contain enough information to satisfy the court that the costs were incurred in obtaining the order and not for carrying out general council tax administration. That would, for a start, require itemising the activities referable to the total cost of administration and identifying what types of cost are attributable to the two enforcement categories (summons/liability order) to verify that the costs are properly referable to enforcement process. The court also needs to be able to verify that the number of accounts with summonses issued and liability orders granted are accurate and haven't been estimated on the low side to artificially inflate the costs. This information is normally available for all councils in the Revenue Collection Statistics, collected and published by the Chartered Institute of Public Finance & Accountancy (CIPFA), but relies on the local authority submitting the data in its returns. The last time Brentwood Council submitted this data relates to the 2001-02 CIPFA return and has for some reason omitted to do so in all subsequent years to date (as is the practice of many other councils). Clearly the calculation does not contain sufficient information to satisfy the court that the costs are reasonably incurred, but it is quite obvious that in the majority of cases the court simply rubber stamps the orders without questioning them. It is hardly credible that the Magistrates would be mindful of the regulations, guidance and case law relevant to costs which is what the majority of councils must rely on to succeed in getting council tax administration funded from the costs recharged to customers for the formality of summonsing them to court.
Yours sincerely,
Helen Barker
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Helen Barker left an annotation ()
For anyone interested or wondering where the breakdown of costs referred to in the above 29 May 2020 correspondence was obtained it can be found in the FOI response here:
https://www.brentwood.gov.uk/foi.php?foi...