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

The request was successful.

Dear Havant 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 Havant 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

Customer Service Centre, Havant Borough Council

Dear Ms Barker

Thank you for your e-mail submitting an FOI request. This has been forwarded to our Information Governance Officer for them to investigate and respond directly to you.

If you have any further enquiries regarding this FOI or any further FOI’s please can you e-mail [email address].

Yours sincerely

Kim Vassallo
Customer Services Officer
Public Service Plaza
Havant Borough Council
Civic Centre Road
Havant
Hampshire
PO9 2AX
Telephone : 023 9244 6019
E-mail [Havant Borough Council request email]
Web; www. havant.gov.uk

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HBC Info Requests, Havant Borough Council

Dear Helen, 

 

Thank you for your request for information which has been received
by Havant Borough Council. 

Your request for information will be dealt with under the Freedom of
Information Act 2000 or Environmental Information Regulations 2004.   

 
Please be advised that during the Coronavirus (COVID-19) pandemic, council
staff are giving priority to the most critical of council services. We
will endeavour to provide you with a response within 20 working days,
however, please be aware that in some cases there may be a delay in
responding to some or all of your request for information. Thank you for
your understanding during this time. 
 

For more information on our approach to information requests and to view
our Publication Scheme, please use the following
link: [1]http://www.havant.gov.uk/freedom-of-info... contact us
on: [2][email address]  

  

Kind regards,  

  

Information Governance  

Havant Borough Council   

Public Service
Plaza                                                             

Civic Centre Road   

Havant PO9 2AX 

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HBC Info Requests, Havant Borough Council

Dear Helen,

Information request 20-005a

Thank you for your request for information under the Freedom of
Information Act 2000, which was received by Havant Borough Council on 11
April 2020. You have requested the following:

Q1. Does Havant 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 

No.

However, no summonses are issued where there is still an item of
outstanding correspondence to be dealt with.

 

Also we will use our discretion after a summons has been issued if anyone
contacts the council with exceptional circumstances and the action can be
withdrawn at that stage.

Please accept this email as completion of your request.

The information contained in this response is released under an Open
Government Licence, for more information please visit
the Council’s website; [1]http://www.havant.gov.uk/re-use-public-s....

If you are dissatisfied with the outcome of your request, please contact
our Information Governance Department on [2][email address] and
we will conduct an internal review. Upon review, if you are still
dissatisfied, you may appeal our decision by contacting the Information
Commissioner’s Office; for more information please visit the [3]ICO’s
website.

Please be aware, if we do not receive an appeal within 40 days of you
receiving this letter we will assume that you are satisfied with our
response. If you wish to make any further requests for information please
do not hesitate to contact us on [4][email address]

Kind regards,

Information Governance

Havant Borough Council, Public Service Plaza, Havant, PO9 2AX

References

Visible links
1. http://www.havant.gov.uk/re-use-public-s...
2. mailto:[email address]
3. https://ico.org.uk/make-a-complaint/
4. mailto:[email address]

Dear HBC Info Requests,

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 sincerely,

Helen Barker

HBC Info Requests, Havant Borough Council

Dear Helen,

 

Thank you for your request for information which has been received by
Havant Borough Council. 

Your request for information will be dealt with under the Freedom of
Information Act 2000 or Environmental Information Regulations 2004.   

Please be advised that during the Coronavirus (COVID-19) pandemic, council
staff are giving priority to the most critical of council services. We
will endeavour to provide you with a response within 20 working days,
however, please be aware that in some cases there may be a delay in
responding to some or all of your request for information. Thank you for
your understanding during this time.

 

For more information on our approach to information requests and to view
our Publication Scheme, please use the following
link: [1]http://www.havant.gov.uk/freedom-of-info... contact us
on: [2][email address

  

Kind regards,  

  

Information Governance  

Havant Borough Council   

Public Service
Plaza                                                             

Civic Centre Road   

Havant PO9 2AX 

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

From: Helen Barker <[FOI #658842 email]>
Sent: 08 October 2020 10:21 AM
To: HBC Info Requests <[email address]>
Subject: Re: Information Request 20-005a
 
Dear HBC Info Requests,

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 sincerely,

Helen Barker

show quoted sections

HBC Info Requests, Havant Borough Council

8 Attachments

Dear Ms Barker,

           

Information request 20-310

 

Thank you for your request for information under the Freedom of
Information Act 2000, which was received by Havant Borough Council on 8
October 2020. You have requested the following:

 

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.

Once a final notice is issued, it is possible to make a payment
arrangement in certain circumstances and once this is agreed and as long
as it is maintained court action will not be taken. Any arrangement is
discretionary and made after taking into account the individual
circumstances of the taxpayer.

Should a summons be issued, costs of £57.5 are incurred and usually any
payment arrangement made at this stage will be on the basis that the
council continues with its application for a liability order at which
point further costs of £25.00 are incurred.

Please accept this email as completion of your request. 

 

The information contained in this response is released under an Open
Government Licence, for more information please visit the Council’s
website; [1]http://www.havant.gov.uk/re-use-public-s...

 

If you are dissatisfied with the outcome of your request, please contact
our Information Governance Department on [email address] and we
will conduct an internal review. Upon review, If you are still
dissatisfied, you may appeal our decision by contacting the Information
Commissioner’s Office; for more information please visit the [2]ICO’s
website.

 

Please be aware, if we do not receive an appeal within 40 days of you
receiving this letter we will assume that you are satisfied with our
response. If you wish to make any further requests for information please
do not hesitate to contact us on [email address].

 

Kind regards,

 

Information Governance

 

Havant Borough Council 

Public Service Plaza                                                    

Civic Centre Road 

Havant PO9 2AX

[3]2E79DF44 [4]6DAA39F2 [5]FD3C9ED0 [6]63B0FD5E [7]498E711C [8]1E8218A [9]6A952228 [10]5935276

Your privacy matters. Go to [11]www.havant.gov.uk/privacy-policy

 

References

Visible links
1. http://www.havant.gov.uk/re-use-public-s...
2. https://ico.org.uk/make-a-complaint/
3. https://www.havant.gov.uk/
4. http://www.facebook.com/HavantBorough
5. http://www.twitter.com/havantborough
6. http://www.linkedin.com/company/havant-b...
7. http://www.instagram.com/easthantsdc
8. http://www.facebook.com/havantboroughcom...
9. mailto:[email address]
10. http://www.havant.gov.uk/
11. http://www.havant.gov.uk/privacy-policy

Dear HBC Info Requests,

Thank you for clarifying 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.

As the response states, discretion is not exercised at the point where a decision is needed to be made about whether to request a summons. Although 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 is apparent that the defendant incurs a £57.50 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 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 upon the council obtaining a Liability Order (to secure the debt). A total £82.50 court costs are added comprising summons costs of £57.50 plus a further £25.00 for the Liability Order. The £25.00 sum is added to the £57.50 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 before the court hearing, whether or not they take advantage of the pre-arranged payment plan. This is to compensate the council for the officer time attributed to making the application for a Liability Order (on day of the hearing).

Before the summons stage (final notice), it is 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 switches her method of payment to direct debit. 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 £82.50 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 order has been obtained in respect of officer time engaging with customers who either agree to changing their payment method to direct debit etc. and/or enter into payment agreements. 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 three which I would like to refer to regarding your response namely R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin); Regina v Highgate Justices ex parte Petrou [1954] 1 ALL ER 406 and Williams v East Northamptonshire [2016] EWHC 470 (Admin).

Regina v Highgate Justices ex parte Petrou [1954] 1 ALL ER 406

The council's approach in treating customers differently regarding arrangements and the application (or not) of costs etc., implies that the authority exploits the liability order application process to be used as a means of encouraging a change in behaviour. The suggestion that the council chooses to waive costs in some cases but not others points to the costs of the court application being exploited to act as a penalty.

Reading between the lines from the information available the council offers the customer the option to carry on paying by instalments once their right to do so has been lost at the final notice stage (when the whole outstanding balance is due) if they agree to change their payment method to Direct Debit. The loss of entitlement to pay by instalments will for an element of customers inevitably lead to their debt being subject to enforcement and the addition of costs. In these circumstances, the use of enforcement is not a necessary step, not if the council can be swayed from resorting to it if the customer elects to pay her Council tax by Direct Debit. The council having such a policy is clearly exploiting the threat of enforcement as bargaining power to secure a greater number of customers using the council's preferred method of payment.

It is likely that the council would prefer not to have to pursue payment by the various recovery methods permitted by the liability order because it would be more convenient and cause less administration not to and in any event, the chances of the whole amount being recovered would be greater (and quicker) if private contractors were not first having to be paid their enforcement fees. Whether the recovery action is pursued and costs imposed hinges on how the customer engages with the council after payment has been defaulted on. Pursuing recovery in some cases but not others suggests that rather than enforcement being necessary and the most appropriate course of action in every case, the costs of the court application are exploited to act as a penalty.

The law makes no provision for one party wishing to make use of the court to do so in order to inflict a penalty on the other by way of the costs which the court may order against the defendant. The judgment in the Highgate Justices case held that costs should not exceed the proper expenditure incurred and should not be a penalty. If the council requires further powers to enforce the debt, the court's permission must first be obtained, so the costs are incurred as a consequence, rather than the purpose of the application. Local authorities which exploit the judicial procedure to act as a deterrent in a way that penalises the defendant or to act as a threat to encourage prompt payment are doing so for an improper purpose.

Williams v East Northamptonshire [2016] EWHC 470 (Admin)

It is implied from the council's website that that upon the issue of a summons the £57.50 costs are incurred. I am making the assumption that the costs are actually added to the customer's account at the point when the summons is issued 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's has confirmed that when a summons is issued, but before the Court hearing, it is possible to agree a payment arrangement but on the basis 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 (£57.50 summons and £25.00 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.

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).

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, 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.

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 nine obvious additional defences that would be valid if no discretion is exercised prior to requesting the issue of a summons, expenditure incurred by the council outside the process of applying for and obtaining a liability order is included in those costs and a decision to charge costs can depend on whether or not a customer agrees to pay by direct debit or the council wants them to act as a penalty. 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 £57.50 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. decisions whether to apply/waive court costs or not to enforce being dependent on a customer agreeing to pay by direct debit is evidence that the enforcement process is exploited for an improper purpose, i.e. to encourage behaviour (see Regina v Highgate Justices ex parte Petrou)

6. 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;

7. 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 arrange for direct debit payments;

8. 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

9. 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