Tax accounting please

I am the agent for the fictional strawman that was created with the name Sarah Goldsmith made this Freedom of Information request to Torbay Borough Council

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I am the agent for the fictional strawman that was created with the name Sarah Goldsmith

Dear Torbay Borough Council,

Please supply me with accounts from the years 2010, 2011 and 2012 (to date) for the following:

1) The total £ DEMANDED/CLAIMED by Torbay Council for Council Tax and National Non Domestic Rates.

2) The total £ RECEIVED by Torbay Council for Council Tax and National Non Domestic Rates.

3) The total £ RECEIVED in court costs which Torbay Council charged to tax payers for non payment of Council Tax and National Non Domestic Rates.

Thank you kindly,

Sarah Goldsmith

Becky Bbear left an annotation ()

Sarah - Didn't you leave something out?

The total cost TO the Council for recovery of outstanding payments.

I would have thought that figure would have been useful to compare against the costs recovered figure?

Just a suggestion.

Becky

I am the agent for the fictional strawman that was created with the name Sarah Goldsmith left an annotation ()

Hmm good point... thank you x

I am the agent for the fictional strawman that was created with the name Sarah Goldsmith

Dear Torbay Borough Council,

I have slightly amended the previous FOI request to include one other item - see point 4.

Please supply me with accounts from the years 2010, 2011 and 2012
(to date) for the following:

1) The total £ DEMANDED/CLAIMED by Torbay Council for Council Tax
and National Non Domestic Rates.

2) The total £ RECEIVED by Torbay Council for Council Tax and
National Non Domestic Rates.

3) The total £ RECEIVED in court costs which Torbay Council charged
to tax payers for non payment of Council Tax and National Non
Domestic Rates.

4) The total COST to Torbay Council regarding non payment of Council Tax and National Non Domestic Rates - this may include administration/staff/court/bailiff/any other recovery costs.

Thank you kindly,

Sarah Goldsmith

Becky Bbear left an annotation ()

Sarah - Be interesting to see the comparison between amounts recovered and cost of recovery.

Good luck with this one, glad I could help.

Becky - X

Torbay Borough Council

Please read the Council's email disclaimer notification which is located
at the end of the email message.

Dear Sarah Goldsmith

 

Request for Information made under the Freedom of Information Act 2000

 

Thank you for your request for information, which was received on 17
September 2012. We are currently processing your request under the terms
of the Freedom of Information Act 2000 and will contact you within 20
working days.

 

If you have any queries about this email please do not hesitate to contact
us quoting the reference number listed at the top of this email in all
communications.

 

Yours sincerely

 

 

 

 

Angela Hellier

Information Compliance Officer

Torbay Council

Email: [email address]

Phone: 01803 207413

Mail: Information Compliance, Torbay Council, Town Hall, Castle Circus,
Torquay TQ1 3DR

Find out more at: www.torbay.gov.uk/accesstoinformation

 

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Torbay Borough Council

Please read the Council's email disclaimer notification which is located
at the end of the email message.

Dear Sarah Goldsmith

 

Further to your request received on 17 September 2012, I confirm that
Torbay Council has completed its search for the information that you
requested.

 

This information is as follows:

 

     Please supply me with accounts from the years 2010, 2011 and 2012 (to
date) for the following:

    

     1.    The total £ DEMANDED/CLAIMED by Torbay Council for Council Tax
and National Non Domestic Rates.

    

     2.    The total £ RECEIVED by Torbay Council for Council Tax and
National Non Domestic Rates.

    

     3.    The total £ RECEIVED in court costs which Torbay Council
charged to tax payers for non payment of Council Tax and National Non
Domestic Rates.

    

     4.    The total COST to Torbay Council regarding non payment of
Council Tax and National Non Domestic Rates - this may include
administration/staff/court/bailiff/any other recovery costs.

 

 

            2010

Council Tax

Gross Debit                                        £85,859,730.92

Payments Received                         £60,467,258.33

Costs raised                                            £264,045.51

Costs to the council                         Nil – all costs incurred and
paid for by Council Tax payers who have had liability orders granted
through the Magistrates Court.

 

National Non-Domestic Rates

Gross Debit                                        £35,090,753.21

Payments Received                         £33,288,177.40

Costs raised                                               £25,347.35

Costs to the council                         Nil – all costs incurred and
paid for by Business Rate payers who have had liability orders granted
through the Magistrates Court.

                                                                                               

2011

Council Tax

Gross Debit                                        £86,382,193.35

Payments Received                         £60,761,119.48

Costs raised                                             £234,631.70

Costs to the council                         Nil – all costs incurred and
paid for by Council Tax payers who have had liability orders granted
through the Magistrates Court.

 

National Non-Domestic Rates

Gross Debit                                        £38,991,114.75

Payments Received                         £36,416,259.63

Costs raised                                               £18,010.61

Costs to the council                         Nil – all costs incurred and
paid for by Business Rate payers who have had liability orders granted
through the Magistrates Court.

 

2012 figures can only be estimated and therefore not subject to FOIA.

 

 

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Yours sincerely

 

 

 

 

Angela Hellier

Information Compliance Officer

Torbay Council

 

Email: [5][email address]

Phone: 01803 207413

 

Mail: Information Compliance, Torbay Council, Town Hall, Castle Circus,
Torquay TQ1 3DR

 

Find out more at: [6]www.torbay.gov.uk/accesstoinformation

 

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I am the agent for the fictional strawman that was created with the name Sarah Goldsmith

Dear Torbay Borough Council,

Thank you kindly for this information

Sarah Goldsmith

Becky Bbear left an annotation ()

Sarah - Correct me if I'm wrong here, but isn't there an anomaly with the figures for cost recovery?

The recovery costs incurred by the Council may well be 'built in' to the awards made by the Court, but those sums will be recovered by instalment payments over time - factored into the individual repayment schedules ordered by the Court.

The Council on the other hand would have incurred its recovery costs 'up front', paying the associated administrative expenses from its annual budget and therefore showing a corresponding 'loss' in the relevant years - amounts that would then not be available for other areas of Council expenditure, or earning interest for the Council.

For accounting purposes this may well be shown as a debt, reducing over the term of the repayment schedules, but I wouldn't exactly call it a 'nil' - figure. Particularly since the overall level of such 'debts' would also increase annually, as new repayments were ordered by the Courts.

Maybe ask them to 'qualify' that 'nil' figure annually?

Becky

I am the agent for the fictional strawman that was created with the name Sarah Goldsmith

Dear Torbay Borough Council,

It has been pointed out to me that there may be an anomaly in your figures above regarding point 4 of my FOI request (The total COST to Torbay Council regarding non payment of Council Tax and National Non Domestic Rates - this may include administration/staff/court/bailiff/any other recovery costs.)

For each year, you have quoted a £NIL value.

Please clarify whether you have to pay UP FRONT for ANY costs regarding non-payment, such as upfront court costs or the cost of Liability Orders for example.

If so, the figure should not be NIL... unless every penny that has been paid upfront has been repaid IN FULL within that particular year...

Yours faithfully,

Sarah Goldsmith

Torbay Borough Council

Please read the Council's email disclaimer notification which is located
at the end of the email message.

Dear Sarah Goldsmith

 

Thank you for your email date 26 September 2012. 

 

As stated in our response to your FOI request 1213423, the answer to
question 4 is a Nil, because all costs incurred are paid for by the
Council Tax/Business Rates payers who have had a liability order granted
through the Magistrates Court.

 

Yours sincerely

 

 

 

Angela Hellier

Information Compliance Officer

Torbay Council

Email: [email address]

Phone: 01803 207413

Mail: Information Compliance, Torbay Council, Town Hall, Castle Circus,
Torquay TQ1 3DR

Find out more at: www.torbay.gov.uk/accesstoinformation

 

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I am the agent for the fictional strawman that was created with the name Sarah Goldsmith

Dear Torbay Borough Council,

Thank you kindly for your VERY swift response.

If I may just clarify... are you saying that EVERY PENNY spent on recovery through the courts and the cost of the liability orders is paid for by people "who have had a liability order granted through the Magistrates Court"?

EVERY PENNY? There have been NO defaulters, nobody has EVER refused to pay, nobody has not had the means to pay and EVERY PENNY was paid back to you WITHIN that accounting year?

OR.. are you saying there is NO COST to the council for obtaining liability orders upfront in any case - and that particular court 'privilege' is provided free of charge to you....

Yours faithfully,

Sarah Goldsmith

Becky Bbear left an annotation ()

Sarah - Somehow reading their response I get the impression the person dealing with it doesn't quite grasp the difference between having the costs of recovery awarded by the Court and the fact that those costs would initially be met from Council funds until repaid by instalments.

This may be because those costs would probably be spread across different accounting areas - adminstrative costs would likely fall within the budget area of the Council Tax team itself, with legal costs falling within the budget area of the Council's Legal Services team.

Bailiff costs, where they arise, may fall under another budget area - or be met by 'selling' the debt(s) to a private collection agency rather than Court Bailiffs.

Whichever way they account for them, it is very unlikely that all of the Council's expenditure on bringing cases to Court and collecting sums awarded would be met case by case within a single accounting year.

The only way that could happen is if the persons involved repaid the full amount of the debt/costs within a single year. By any known accounting method if that didn't happen part of the debt/costs would 'carry over' into subsequent accounting years.

It's possible that they are accounting for this 'difference' by crediting repayments from one year to off-set carry over figures in the next and strike a balance. But that's not really providing a 'true' picture of costs in one accounting year, compared against amounts recovered for those same individual debts in the same year.

Example:

A has a repayment of $100, plus $50 costs, awarded against them repayable by instalments of $10 per month over 15 months. A meets their repayments each month for the full term.

Council starts with a loss of $150 and recovers $120 in the first accounting year, carrying over an outstanding balance of $30 into the next.

Where A defaults on instalments the debt increases each time by $10, also increasing the term of the repayment schedule and the amount carried over into the next accounting period.

Where A refuses to repay entirely and goes to prison instead, Council writes off $150 as an unrecoverable loss in that accounting year.

This is a simplification, because the amount of debt may also increase if A is brought back to Court and has additional costs awarded against them, but the principle is pretty solid. The total amount of debt/costs recovered in any one year may equal or exceed the amount of 'new' debt/cost in that same year, but that's not the true picture because those sums recovered would include debts/costs from previous years.

There must by default be some sort of rolling balance carrying over within 'individual' debt accounts - unless everyone repays the full amount immediately on having it awarded against them. Those balances represent money the Council hasn't yet recovered.

Good point to raise defaulters, as the above example shows it's always possible to refuse to pay and accept a prison term instead - which effectively clears the debt and leaves the total loss with the Council to be written off.

Maybe ask how many such debts have been written off in each year and what the total loss to the Council was?

May be more interesting to ask for the current total amount of outstanding repayments arising in a given year, which are still owed to the Council as of a given date this year. That figure is going to be different to the totals owed/recovered figures they provided.

It would be surprising if they didn't know that figure without going through all of the individual repayment accounts.

Question: Does this count as collaboration?

Becky

I am the agent for the fictional strawman that was created with the name Sarah Goldsmith left an annotation ()

Becky, from the experience of people I know, a prison term does NOT extinguish council tax debt.

Prison is the punishment the courts mete out for failing to follow the court order to pay.

The tax outstanding is still due and payable upon release... or the cycle continues.....

Becky Bbear left an annotation ()

Sarah - Apologies.

I was thinking in terms of US law, where imprisonment for a debt extinguishes that debt up to the point of imprisonment.

I can see how folks in the UK would understandably be upset over effectively being punished twice (or more)for the same offence.

Do you know if in such cases, where a person refuses to pay the amount awarded by the Court, they are imprisoned for the actual debt - or for breaching the repayment Order made by the Court?

Just wondering, because there would seem to be a difference if the UK has an equivalent legal principle to 'double jepardy'.

Becky

I am the agent for the fictional strawman that was created with the name Sarah Goldsmith left an annotation ()

Becky - I don't know if they are imprisoned for the debt or breaching the order per se.

I feel another FOI coming on...

Becky Bbear left an annotation ()

Sarah - It could be difficult to frame a request asking for details of how many custodial sentences were awarded as a result of prosecutions for non-payment of liability Orders, or non-payment of Council Tax.

Those figures would likely only be held by the individual Courts imposing the sentences - not sure if such figures would be reported on to the MOJ for collation, or collated/held by individual Councils.

Wording the request itself wouldn't be so difficult, but identifying which authority actualy held that information could be.

Maybe think about trying MOJ and/or HMCTS first just to ask if they collect/collate such figures?

Near as I can tell from the information available on the MOJ website, there were 101,200 custodial sentences awarded nationally in the 12 months to March 31 2012 - So I guess that would be the starting figure from which to ask how many related to non-payment of liability Orders.

Here's the link for reference:

http://www.justice.gov.uk/statistics/cri....

Good luck with this one, I have a feeling it may take some time to get the information.

Question: You said you had first-hand knowledge of people who were imprisioned for non-payment, have you asked them what exactly it was they were imprisoned for - not paying the tax, or not complying with the Order?

Becky

I am the agent for the fictional strawman that was created with the name Sarah Goldsmith left an annotation ()

Yes, as far as I know, the people were imprisoned for not complying with the order - they still had to pay when they were released (don't know if they did, though)!

Becky Bbear left an annotation ()

Sarah - KK, just wondered, boy UK law really sucks.

Becky - X

Torbay Borough Council

Please read the Council's email disclaimer notification which is located
at the end of the email message.

Dear Sarah Goldsmith

 

Re. your query to the response you received to your FOI request ref.
1213423, please see below the information we have received from the
relevant service area.

 

The court costs of £85.00 are added to a person’s account at the time a
liability order is granted.

This figure reflects the administration involved in the recovery process,
and includes the fee that the council pays to the Magistrates Court for
the hearing.

This additional cost then becomes payable by the parties named on the
account along with any remaining charge.

 

Yours sincerely

 

Angela Hellier

Information Compliance Officer

Torbay Council

Email: [email address]

Phone: 01803 207413

Mail: Information Compliance, Torbay Council, Town Hall, Castle Circus,
Torquay TQ1 3DR

Find out more at: www.torbay.gov.uk/accesstoinformation

 

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Becky Bbear left an annotation ()

Sarah - So I was right.

Seems like they just confirmed that the 'NIL' costs information provided in their initial response was in fact inaccurate/misleading.

The Council waits to recover its costs through the individual repayment schedules - which like I said is likely to run over more than one financial year in most cases.

So at £85 per person the 'true' cost to the Council in each financial year is:

Number of active repayment Orders issued in each financial year x £85.

Taking their quoted figures, which show a deficit between amount owed and amount recovered each year, divide the 'Costs Raised' figure by £85 to work out roughly how many repayment schedules are running in each year.

Maybe ask how many active repayment schedules are running in each finacial year, as a comparison check.

Also seems like the obvious question would be at exactly what point in the process does the Council actually pay the Court its 'share' of the recovery costs (the cost to the Court of drawing up/issuing each recovery Order)?

Isn't finance fun!

Becky

bob jones left an annotation ()

the really interesting part is that whilst they are charging £85 per liability order issued they don't pay anything like that amount since they pay a single fee for multiple charging orders in bulk process. So may pay a single court fee of £45 but charge several hundred people £85. Yet another scam....

Becky Bbear left an annotation ()

Bob - actually it seems to be worse than what you think.

The cost of a Liability Order is £3, the remainder is made up of the Council's claimed 'administrative' costs in recovering the debt.

Here's an example of this in action:

FOI request; The Magistrates Court fixed fee for an application for a Liability Order for Council Tax arrears is currently £3 and that fee is set by Statutory Instrument. Nevertheless, councils are seeking costs orders from Magistrates Courts for Liability Orders substantially in excess of the £3 statutory fee.

FOI reply; The fee for a Liability Order is £3 which is what we charge. The rest of the money is made up of reasonable costs as stated in the (Council Tax (Administration and Enforcement) Regs 1992). All the Sussex local authorities set the same rate although some may have a different split between the Summonses and Liability Order costs. We write to the Clerk of the Justices to get her ok before they are changed.

Please find enclosed a breakdown of the costs as applied by Mid Sussex District Council. Download here...

And here's the link where you can download the doc's it refers to:

http://www.isitfair.co.uk/downloads.html.

Are we having fun yet kids?

Becky