East Devon District Council

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Policy Council Tax and Housing Benefit Fraud and Compliance Strategy

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2. Council Tax Fraud & Compliance

When referring to fraud and error around Tax liabilities there are two common terms;

  • Avoidance - which is where a person legally minimises their liability
  • Evasion – which is where a person illegally evades a liability

Council Tax liability can be reduced through the;

  • award of exemptions or reductions
  • claiming an award through the Local Council Tax Reduction Scheme

There are many different types of discounts and exemptions that can be claimed which can reduce the council tax charge by up to 100%. Examples include, single person discount, student discount, student exemption, persons in care, etc.

The Local Council Tax Reduction Scheme (known as Council Tax Support) replaced Council Tax Benefit (national welfare benefit) in April 2013. This is a means tested reduction for low income households. Council tax can be reduced by up to 100% for those in most need. The Council Tax Support Scheme for working-age customers is prescribed within our Council Tax Reduction Scheme Policy. The pension-age scheme is a national scheme and is prescribed by regulations.

Council Tax Discounts and Exemptions Compliance and Fraud

Compliance – Issuing a Penalty

Council tax legislation allows Councils to impose a penalty of £70 where any person;

  • fails to notify the Council that an exemption on a dwelling should have ended
  • fails to notify the Council that a discount should have ended
  • fails to notify the Council of a change of address or fails to notify the council of a change in the liable person
  • fails to provide information requested to identify liability
  • fails to provide information requested after a liability order has been obtained.
  • fails to notify the Council that there has been a change in their circumstances which would affect council tax reduction

The Council is legally entitled to obtain information from residents, owners or managing agents to help identify the person liable for payment of the council tax.

The law requires the customer to provide the information within 21 days in relation to council tax and one calendar month for changes affecting their council tax reduction scheme.

Where a person fails to supply certain information requested by the Council within 21 days of the request for the information or within 21 days of a change which affects council tax registration or an entitlement to a discount or exemption, or knowingly supplies inaccurate information in purported compliance with such a request, the Council may impose a penalty of £70 on them.

Each case will be looked at individually and all factors will be taken into account before a penalty is imposed. This will include:

  • is the customer vulnerable?
  • is there physical or mental infirmity, such as terminal illness, hearing, sight speech problems, etc?
  • relevant mitigation family/personal circumstances
  • other reasonable excuse as to why the penalty shouldn’t be issued.
  • The amount of overpayment
  • Whether the customer notified the Council within one calendar month

Some of the above circumstances may result in the Council not seeking to impose a penalty

Where a penalty has been imposed and a further request to supply the same information is made again and is not properly complied with, the Council may impose a further penalty of £280, and may do so each time it repeats the request and the person concerned does not properly comply with it. There is no limit to the number of times this penalty can be imposed.

Where a penalty is imposed and the person who has not supplied the information has a council tax account the penalty will be added to this account. In all other cases an invoice will be raised for repayment.

Once a decision has been made to impose a penalty, customers will be issued with a written decision notice setting out the reasons why the penalty has been imposed together with information on how to appeal.

Decision to impose a penalty will be made at team leader level or above.

If the person disagrees with the decision to issue a penalty they can appeal in writing and if the Council is satisfied that the person who has been issued with a penalty had a reasonable excuse, which is an acceptable reason,  for failing to notify the Council then the penalty can be revoked. 

If a customer disagrees with the imposition of a penalty and the Council is not willing to revise its decision then an appeal against this decision can be made to the Valuation Tribunal.

Fraud - Prosecution

In a case where a customer has either knowingly made a false statement, or has knowingly withheld information to obtain or retain entitlement to a council tax discount/reduction the decision to prosecute is fundamentally determined by the severity of the offence which is measured against a number of factors including the financial losses that have been incurred as a result of a fraud.

Each case will be looked at individually to decide what action, if any, is appropriate under this strategy and the Regulatory and Enforcement Prosecution Policy.

Council Tax Reduction Scheme (Council Tax Support) Compliance & Fraud

As with council tax discounts and exemptions we will use the legislative powers provided to impose penalties as an alternative to prosecution. We will use the imposition of a penalty as a tool to change customer behaviours around fraud and error in East Devon.

We will consider imposing a £70 penalty where a customer who has applied for or is in receipt of Council Tax Support either:                                     

  • Negligently makes an incorrect statement or representation or negligently gives incorrect information or evidence and does not take reasonable steps to correct this error and as a result of this has an excess reduction in their Council Tax Support; or
  • Without reasonable excuse fails to give a prompt notification of a relevant change of circumstances which results in an excess reduction in their Council Tax Support.

The processes followed will be the same as set out below.

In most cases the imposition of a penalty by adding this to the council tax account will be the most suitable course of action. However in some instances a formal investigation will be needed. If an investigation requires information from a third party, which includes employers, financial institutions or utilities the Corporate Counter Fraud and Compliance Officer has authorised powers delegated by s151 officer to obtain this information. The code of practice which should accompany these requests is set out at Appendix 1.

Prosecution proceedings brought for a Council Tax Support Scheme offence may begin at any time within a period of 3 months from the date on which evidence, sufficient in the opinion of the prosecutor to justify a prosecution for an offence, comes to the prosecutor’s knowledge or within a period of 12 months from the commission of the offence, whichever period expires last.

The offences which can be considered are:

  • A delay, obstruction, refusal or failure to comply with requests for information from an authorised officer of East Devon District Council.
  • False representation for obtaining a reduction.
  • Failure to notify a change of circumstances.

As an alternative to prosecution, where there are grounds for instituting criminal proceedings against a person, East Devon District Council may write to the person inviting them to agree to pay an administrative penalty.

The amount of the penalty is 50 per cent of the amount of the excess reduction of Council Tax Support which has been overpaid to the customer subject to:

  • A minimum amount of £100; and
  • A maximum amount of £1,000.

If the administrative penalty is accepted by the customer and an agreement for repayment is made no further action will be taken against the customer for this offence.

The customer can withdraw their acceptance within 14 days of their agreement. After this period expires there is no right of appeal. If the customer does withdraw their acceptance, prosecution will then be considered.