East Devon District Council

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Policy Corporate Debt policy

Show all parts of this policy

5. Specific policy areas

Debts covered by the policy are:

1.  Council Tax (see appendix 2 for recovery procedures)

2.  Non-Domestic Rates (Business Rates) (see appendix 3 for recovery procedures)

3.  Housing Rents (see appendix 4 for recovery procedures)

4.  Housing Benefit Overpayments

5.  Parking Fines

6.  Sundry Debts

1 - Council Tax

Recovery procedures are laid down in statute in The Council Tax (Administration and Enforcement) Regulations 1992 and subsequent amendments.

1.1 - our aim is to collect the council tax promptly and efficiently in order to prevent debt and recovery action escalating.

1.2 - The administration, collection and recovery rests with the Head of Finance.

1.3 - The council believes that preventing arrears from building up is essential and the additional measures we take are as follows:

  • We offer three dates for direct debit as we recognise that this is a proven method for ensuring payments are made on time
  • We offer a wide choice of payment options that we advertise on all our bills and recovery documents
  • We will make arrangements to encourage and support customers in getting back on track with their payments
  • We issue reminders promptly to avoid debts escalating
  • We provide up to date advice on our website and in our leaflets
  • We will work closely with housing benefits to identify entitlement and make sure any awards in payment are up to date
  • We will not refuse any payment which reduces the debt. However, if it is less than the requested amount recovery action may continue
  • We will  signpost customers to debt advice agencies and promote these on our literature

1.4 - We will apply to the magistrates court for Liability Orders, when necessary in order to recover the debt. This gives additional recovery powers, including:

  • attachments of earnings
  • attachment of benefits
  • taking control of goods through the use of  enforcement agents
  • charging orders  where liability order exceeds £1000.00 (see page 4)
  • bankruptcy action where liability order debt exceeds £750.00 (see page 4)
  • committal to prison (see page 4) is taken when  other appropriate remedies have been attempted. Magistrates will hold a means enquiry in which they will establish whether the failure to pay has been the result of 'wilful refusal' or 'culpable neglect'. They may decide to fix a term of imprisonment and postpone the warrant on certain conditions, normally relating to the payment of the debt over a period of time. The Magistrates also have the power to remit all, or part, of the debt. The maximum sentence is three months.

1.5 - See appendix 2 for the full recovery details.  

2 - Non Domestic Rates

Recovery procedures are laid down by statute in The Local Government Finance Act 1988 and subsequent regulations and amendments.

2.1 - The administration, collection and recovery rests with the Head of Finance.

2.2 - Non Domestic Rates, commonly known as business rates, are levied on a national basis but the local authority is responsible for billing and collection including appropriate recovery measures.

2.3 - The Council believes that preventing arrears from building up is essential and the additional measures we take are as follows:

  • We offer 2 dates for direct debit as we recognise that this is a proven method for ensuring payments are made on time
  • We offer a wide choice of payment options that we advertise on all our bills and recovery documents
  • We issue reminders promptly to avoid debts escalating
  • We provide up to date advice on our website and in our leaflets
  •  We will not refuse any payment which reduces the debt. However, if it is less than the requested amount recovery action may continue
  • We will make arrangements taking into consideration the fluctuations in income, common to seasonal businesses, and place the emphasis for repayment on times of likely maximum business activity

2.4 - We will apply to the magistrates court for Liability Orders, when necessary, to recover the debt. We will use all appropriate methods of enforcement available through Liability Orders including:

  • taking control of goods, through the use of enforcement agents
  • insolvency proceedings (see page 4)
  • committal to prison (see page 4) is taken when  other appropriate remedies have been attempted. Magistrates will hold a means enquiry in which they will establish whether the failure to pay has been the result of 'wilful refusal' or 'culpable neglect'. They may decide to fix a term of imprisonment and postpone the warrant on certain conditions, normally relating to the payment of the debt over a period of time. The magistrates also have the power to remit all, or part, of the debt. The maximum sentence is three months      

2.5 - See appendix 3 for full details of the recovery process.

3 - Council house and garage rents

The Council’s primary concern is to recover the rent debt rather than to regain possession.  We will consider eviction only as a last resort if all other action has failed.

3.1- The administration, collection and recovery rests with the Head of housing.

3.2 - The council believes that preventing rent arrears from building up is the preferred option. The measures that we will take to support this are:

  • Adopting tenancy start-up procedures which include providing the new tenant with a housing benefit form, welfare benefits checks, a Welcome Pack and rental advice at accompanied lettings stage
  • Advising tenants to submit their housing benefit claim form straight away to maximise benefit and help prevent unnecessary delays
  • Providing readily accessible information to tenants, particularly those with specific needs such as lack of numeracy and literacy skills
  • Providing advice on the various payment options
  • Making sure that tenants know who their Rental Team Officer is so that they can discuss tenancy issues at an early stage

3.3 - We will act promptly in contacting tenants if rent arrears begin to accrue and will adopt the following procedure:

  • We will send reminder letters and may also carry out a home visit
  • If the reminders are ignored we may serve a Notice of Seeking Possession to secure tenants, or a Notice of Seeking Possession or a Notice to Quit, depending on the type of tenancy the tenant has. This is the first step of the legal process to obtain possession of the dwelling. The Notice gives a period of at least 28 days to clear the debt in full or to make an arrangement to pay in instalments. If the debt continues to increase, we will apply to the County Court for a hearing to seek a Possession Order on the property
  • At the hearing, the District Judge will normally grant a Suspended Possession Order requiring the debtor to pay the rent as it falls due plus a fixed sum each week towards the arrears of rent. At the Hearing, we will also seek an order for costs, which will be added to any rent arrears on the rent account. Please see appendix 4 for details of costs
  • If the debtor fails to keep to the terms ordered in the County Court we will inform the Court of the default and request the issue of a Possession Warrant, which the County Court enforcement agent will serve and execute to take possession of the property

We will do everything possible to prevent evictions but, as a last resort, we will evict tenants if they do not pay their rent.

3.4 - If a Council tenancy has been terminated leaving rent arrears, we will:

  • apply to the County Court to set repayment terms
  • if employment details are known, apply to the County Court for an Attachment of Earnings Order. The Court will order an employer to make deductions from the debtor’s earnings to pay the outstanding rent debt
  • apply to the County Court for a County Court Judgement (CCJ). A CCJ will affect the debtor’s credit rating and they will find it difficult to obtain credit, loans, credit cards etc.

Subsequent applications for housing with any Local Authority or other Registered Social Landlord (Housing Association) may be affected by any rent outstanding from a previous tenancy.

3.5 - Garage rents are recognised as non-essential expenditure therefore, failure to pay will result in proceedings to terminate the licence.

  • Once garage rent of four weeks is owed we will serve a Notice to Quit and, at the end of that period of notice (minimum of 28 days), we will change the locks and repossess the garage.

3.6 - See appendix 4 for full details of the recovery process.

4 - Housing Benefit and Council Tax Reduction overpayments

These are recovered in accordance with Housing Benefit Regulations 2006, Council Tax Benefit Regulations 2006 and The Council Tax (Administration and Enforcement) Regulations 1992, as amended.

4.1 - The administration, collection and recovery rests with the Head of Finance. 

4.2 - Council tax benefit overpayments are always added back to the council tax account and are therefore recovered in accordance with council tax regulations. Housing Benefit overpayments are recovered as detailed in 4.4

4.3 - Overpayments occur because a customer has been paid too much benefit and so the Council’s aim is to try and prevent this from happening. We have the following measures in place:

  • Customers being supported through the application process to ensure they are paid the right amount of benefit.  
  • The use of leaflets, website & letters to reinforce customers responsibility to notify us immediately of any changes in circumstances which are then dealt with promptly.

4.4 - Once a Housing Benefit overpayment has been created the Council will normally collect from on-going housing benefit where it is in payment. Recovery rates are set by Department for Work and Pensions (DWP) and, initially, we will always apply the maximum recovery rate permissible. Staff have the discretion to reduce the recovery rate or suspend deductions if the customer can show that this would cause unreasonable hardship, for instance, where a customer is unable to pay their rent or is on a Suspended Possession order.

4.5 - Where there is no on-going housing benefit we will issue an invoice for payment. A customer has one month to pay before further recovery action. To prevent recovery action we:

  • Offer a wide choice of payment options
  • Encourage and support customers to make an arrangement
  • Provide up to date advice on our website and in our leaflets
  • Do not refuse any payments which reduces the debt. However, if it less than the requested amount recovery action may continue.

4.6 - If after one month the invoice remains unpaid and no arrangement has been agreed then a first reminder will be sent giving seven days to pay. If no payment or contact is made within 14 days then a second reminder is sent giving a further seven days to pay. If the debt still remains unpaid we will consider taking the following actions:

  • Deduction from certain DWP benefits
  • By applying to another local authority for them to deduct from the customer’s on-going housing benefit
  • Recovery from their landlord where the landlord is now being paid for a current tenant
  • Direct earnings attachment
  • Applying to the County Court
  • Use debt collection agencies to recover on our behalf

4.7 - Overpayments that have occurred because of fraud are excluded from insolvency and recovery will continue once they have been discharged.

4.8 - Some benefit/council tax reduction overpayments are not recoverable. These arise if we or the DWP, make an error where the customer to whom the benefit/council tax reduction was paid, cannot reasonably have been expected to know they were receiving benefit/council tax reduction to which they were not entitled.

5 - Parking fines

These are recovered in accordance with the requirements of the Traffic Management Act 2004.

5.1 - The administration, collection and recovery rests with the Head of Environment.

5.2 - The fine is discounted by 50 per cent for the first 14 days after the Penalty Charge Notice is served (14 days is counted as not later than the last day of a 14 day period starting from the date the Penalty Charge Notice is served). If the debtor fails to pay the discounted rate and does not successfully challenge the Notice, the full charge will be due.

5.3 - After 28 days from the serving of the Notice, if the full amount of the fine remains unpaid (or has not been successfully challenged) the Council will send a ‘Notice to Owner’ to the registered keeper of the vehicle. This gives the following options:

  • 28 days to pay in full
  • Make representations against the serving of the Notice to Owner and if these are rejected make an appeal to the Traffic Penalty Tribunal. If the appeal is successful, we will withdraw the Penalty Charge Notice and return in full any payment that has been made to us.

5.4 - If the debtor does neither of the above, we will send a ‘Charge Certificate’ and the fine will increase by 50%. There is no right of appeal at this stage and the increased charge (the original fine plus 50%) must now be paid by 14 days from the service of the Charge Certificate.

5.5 - If the full charge remains unpaid after 14 days, we will send a Notice of Pre-debt Registration letter to the registered keeper of the vehicle informing them that we will register the debt in the County Court of the Traffic Enforcement Centre, Northampton. The letter also gives the debtor another chance to pay the full charge due within 14 days.

5.6 - If the charge remains unpaid after the 14 day period, we will register the debt in the County Court. A court fee will be added and the debtor will be sent an ‘Order of Recovery’.

5.7 - On receipt of the Order of Recovery, the debtor is required:

  • to pay the full charge within 21 days from the service of the Order, or
  • fill out a ‘Witness Statement’  (enclosed with the Order of Recovery). This gives the debtor the opportunity to sign a ‘Statement of Truth’ as regards four specific claims:

- The debtor did not receive the Notice to Owner (parking contravention) document.

- The debtor appealed to the Parking/Traffic adjudicator against the Council’s decision to reject their representation, within 28 days of service of the rejection notice, but had no response to their appeal.

- The debtor made representations about the penalty charge to the enforcing authority concerned within 28 days of the service of the Notice to Owner, but did not receive a rejection notice.

- The penalty charge had been paid in full.

5.8 - If the debtor does nothing, the Court will issue a Warrant of Execution’ authorising an enforcement agent to recover the debt. The debtor will then become liable for enforcement fees in addition to the original fines and costs.

5.9 - In some circumstances, the Parking Services Manager can authorise the Enforcement Agent to wheel clamp the vehicle until the debt has been paid. The Parking Services Manager must be satisfied that the debtor is classified as a ‘can pay, but won’t pay’ debtor. Other debts to the Council must also be considered to determine if any are priority debts, see appendix 1. Authorisation to use wheel clamps will be refused if the person is:

  • on a low income ( unable to pay)
  • registered disabled ( continued access to the vehicle is an essential part of their life)
  • infirm
  • vulnerable.

6 - Sundry debts

These are civil debts which are recoverable through the County Court. Debts that will be recovered in this way include abandoned vehicles, rent deposits, Home Safeguard fees, rents from commercial lets and many other fees for services.

6.1 - The collection and recovery of sundry debts rests with the Head of Finance.

6.2 - When the Council has failed to recover the debt through the usual invoicing process, we will initially send reminder letters which specify the period within which payment must be made.

6.3 - Twenty eight days after the issue of a second reminder, we may transfer the outstanding debt to collection agents (enforcement agents).

6.4 - Larger debts may be passed to the Council’s Legal Department so that an application for a County Court Judgement (CCJ) can be made. A letter before action will be sent giving 14 days to pay before an application to the County Court is made.

6.5 - On receipt of a Notice of Issue (NI), the debtor has 15 days in which to reply to the Court or the Council. The Council may agree to a suitable payment arrangement with the debtor at this stage.

6.6 - If there is no response to the NI, we will make an application to the Court for a judgement in default.

6.7 - If the debtor contests the claim, the Legal Department will prepare a case to present to the Court.

6.8 - A County Court Judgement gives the date for the first payment from the debtor.

6.9 - If no payments are received, and the debtor’s employment details are known, an Attachment of Earnings Order may be made unless the Council already has one in place in any other section.

6.10 - If an Attachment of Earnings or a Court Order is not successful the debt may be passed to the Council’s enforcement agent. Where there is going to be a recurring invoice the service area will also be informed in order to prevent further debts from building. This may result in the service being removed until the invoice is paid, for example: rental of beach hut, car park space, etc.