What happens if I don't pay my Council Tax?

1. Introduction

This document sets out the methods used by Coventry City Council (herein referred to as ‘the Council’) to recover unpaid council tax.

2. Debt advice

Information about free and independent debt advice.

3. Legislation

The Council’s powers to collect and enforce council tax are set out in the Council Tax (Administration and Enforcement) Regulations 1992 (as amended).

4. Council tax bill

Following the initial bill, every tax payer has the right to pay in statutory monthly instalments but the balance must be cleared by 31 March of the financial year for which the council tax falls due.

5. First reminder notices

A first reminder notice is issued 14 days after a missed payment. The account must be brought up to date within 7 days or the right to pay by instalments is withdrawn and the full amount becomes payable.

If payment is not made no further reminders are issued and a court summons will be issued not less than 14 days after issue of the reminder notice.

6. Second reminder

A second reminder notice is issued where a tax payer misses an instalment and has already received a first reminder in the same financial year but subsequently brought the account up to date. The second reminder advises that no further reminders will be issued in the financial year.

7. Final notice

A final notice is sent where a bill has been issued with only one instalment date and the tax payer is not entitled to pay by instalments. This would be most common where a bill is issued, for example, towards the end of the financial year and only one payment date is left for the tax payer to pay the balance. Or where a bill is issued for a prior year liability and the amount due is payable by a single payment. A final notice is issued 14 days after the missed payment.

8. Affordability

Even if the full amount has fallen due, the tax payer can request a payment plan. The tax payer does not have the statutory right to pay by instalments at this stage but the Council will consider reasonable payment plan offers.

Unless there are exceptional circumstances, arrangements should clear the council tax balance in the financial year in which it falls due.

Where a tax payer has accumulated arrears of council tax the Council will attempt to agree an affordable and realistic payment plan but one that takes account of council tax being a priority debt.

The Council operates a financial circumstances form for people with affordability issues. The form provides a standardised process for determining how much people can reasonably afford to pay towards their council tax debt.

Information about organisations offering free and impartial debt advice can be found by visiting www.coventry.gov.uk/moneyanddebtadvice

9. Vulnerability

A potentially vulnerable person is defined in the National Standards for Enforcement Agents and may include:

• The elderly
• People with a disability
• The seriously ill
• The recently bereaved
• Single parent families
• Pregnant women
• Unemployed people
• Those with long term prolonged incapacity
• Those who have obvious difficulty in understanding, speaking or reading English.

Please refer to the Council’s Revenue Collection and Vulnerability Policy which can be found at www.coventry.gov.uk/counciltaxadvice

When assessing cases and making decisions the Council will have due regard to the public sector equality duty under s149 Equality Act 2010.

10. Payment arrangements

Before the Council agrees a payment arrangement, tax payers may be asked questions about their finances, including:

• who do you work for
• how much do you earn
• the address of your workplace
• information about anyone else named on your council tax bill.

11. Summons

In cases where the right to pay by instalments is lost and an amount remains outstanding, a summons will be issued for the tax payer to appear at a Magistrates Court. At the hearing, not less than two weeks from the date of the summons, the Council will seek a liability order. Summons costs are added to the account at the point of summons and the Court will consider whether to grant the costs at the hearing.

If the balance, including costs, is credited to the council tax account in full up to 24 hours before the hearing then the Council will not proceed with the application.

If the tax payer pays part of the balance or contacts the Council to make an arrangement the Council will continue to apply for the liability order but will not take further action subject to payments continuing as agreed.

12. Court Hearing

The Council operates a virtual help desk on the day of the Magistrates Court hearings. Council officers are available to speak to tax payers virtually to make a payment arrangement on the morning of the hearing. Tax payers wishing to attend the virtual help desk should visit the Council’s customer service centre at Broadgate House where they will be interviewed virtually via video call on a Council device.

The help desk is a discretionary local arrangement offered by the Council to assist tax payers. The provision of a helpdesk is not an entitlement and tax payers are encouraged to make contact with the Council at the earliest opportunity rather than wait until the day of the hearing.

The operation of a help desk does not in any way affect a person’s right to go before the Court to defend the application for a liability order.

Tax payers are not obliged to go before the Court. If the tax payer does not attend the Court or does not go before the Court, then the Court has the power to grant the liability order in the person’s absence.

13. Liability Order Granted

Once a liability order has been granted, if a payment arrangement has not been agreed, a Notification of Liability Order will be issued to the tax payer requiring the provision of further information and advising that the account will be sent to an enforcement agent if payment or contact is not received.

Tax payers are legally required to provide information to the Council in response to the Notification of Liability Order, including employer details and details of any benefits being received. Regulation 56 of the Council Tax (Administration and Enforcement) Regulations 1992 determines that failure to respond is an offence and can result in the imposition of a penalty charge.

Obtaining a liability order means the Council can enforce it in the following ways:

• apply for deductions from certain social security benefits;
• compel an employer to deduct money directly from a tax payers earnings;
• apply for deductions from Members allowances;
• refer the debt to an enforcement agent (formerly known as bailiff);
• petition for bankruptcy;
• apply to the county court for a charge against the property for which the tax is payable;
• apply to a magistrates court for the tax payer to be committed to prison. This measure is contingent upon the debt previously having been returned by an enforcement agent who has confirmed that they could not seize goods to the value of the debt.

14. Discretion

The Council Tax (Administration and Enforcement) Regulations 1992 determine that a person cannot be committed to prison for non payment of council tax unless an enforcement agent has first confirmed that there are not sufficient goods to be removed to recover the value of the debt.

Other than this, all enforcement remedies are available to the Council at the point a liability order is obtained.

The Council may decide to employ whichever enforcement remedy is deemed appropriate at any stage in the process providing it is legislatively compliant and proportionate in the individual circumstances.

Deductions from benefits or earnings followed by the use of enforcement agents would generally be applied in the first instance. However, officers may consider it appropriate to expedite the initiation of insolvency or charging order proceedings. In particular, this may be appropriate where there are multiple year debts and other actions have proved unsuccessful previously or where information suggests that tax payers are intending to sell the liable property.

The Council may consider the merits of individual cases and seek a form of enforcement which is proportionate to the debt and the circumstances of the tax payer but which also considers the interests of the wider tax payer and the need to protect public funds.

The process of committal, insolvency or charging orders are subject to authorisation by senior officers.

15. Deductions from benefits/attachment of earnings

Once a liability order has been granted officers will review accounts, prior to referral to an enforcement agent, to identify cases that are appropriate for an attachment of earnings order or deductions from eligible benefits. In determining whether an account is suitable for either an attachment of earnings or deductions from benefits the Council will consider the amount of deductions that would result and how this would repay the balance and/or meet the ongoing council tax liability.

The amount of benefit and earning deductions and are set out in statute. Where a deduction does not meet the ongoing council tax liability, nor therefore reduces the overall debt, the Council will consider alternative enforcement remedies.

The Council can request a maximum of two attachment of earnings orders be implemented at the same time. The Council will consider the merits of individual cases where it is suggested that the application of two simultaneous orders causes undue hardship.

The Council undertakes data sharing with Her Majesty’s Revenues and Customs (HMRC) to obtain employer details for the purpose of setting up attachments of earnings.

16. Enforcement Agents

If, after 14 days from the obtainment of a liability order, the debt remains unpaid in part or in full and no payment arrangement is in place, the debt will be referred to an enforcement agent. At this point the tax payer will incur a compliance fee of £75. If after 21 days the debt remains unpaid then the debt will enter the enforcement stage and incur a further £235 in statutory fees. Further statutory fees may be applied to the account should the enforcement agent be required to take control of and ultimately dispose of goods.

Once an account has been issued to an enforcement agent, the Council will direct all contact to the relevant enforcement agent. Where the tax payer indicates that they may be vulnerable then the Council will communicate this information to the Enforcement Agent and agree to take back the account only where it is considered that the vulnerability impacts on the debtor’s ability to pay the debt.

Please refer to the Guidelines for Potentially Vulnerable Groups which can be viewed at www.coventry.gov.uk/counciltaxadvice

17. Cases returned from enforcement agents

If an account is returned by an enforcement agent because they have been unable to identify goods then the account will be passed to a second enforcement agent who will apply the same fees as they attempt to recover the debt.

Once an account has been returned by two enforcement agents, officers will review the account for further action and give consideration to:

• whether the account is suitable for an attachment of earnings order or deductions from benefits;
• whether the debt exceeds £5,000 and whether the tax payer holds assets or equity in a property that could repay the debt in the event of bankruptcy;
• whether the debt exceeds £1,000 and whether the rate payer owns the property for which the charge has arisen. In such cases a charging order may be appropriate. If so the case can be passed to a Court Officer for authorisation.

18. Bankruptcy

Where a debt exceeds £5,000 and there appear to be sufficient assets to repay the debt, the Council will consider petitioning for bankruptcy.

19. Charging Order

Where a debt exceeds £1,000 and the tax payer owns the property for which the council tax is payable, the Council can apply to the County Court to have a charge placed against the property equivalent to the value of the debt. If the property is subsequently sold then proceeds from the sale will be used to settle the charges plus any interest accrued.

Should the value of the charges secured reach £5,000 the Council may consider bankruptcy proceedings as outlined above.

20. Order for sale

Where a charging order is secured against a property the Council can apply to the County Court for an order for sale. This would enable the Council to take possession of the property and to sell it. Proceeds from the sale would be used to repay the value of the debt and associated costs and interest.

The Council will consider the merits of individual cases and consider what action is appropriate and represents the best interests of the wider tax payer and the individual.

The initiation of an Order for Sale process will be authorised by a Director and Cabinet Member.

21. Committal Surgery

Where an account has been returned by an enforcement agent because they have been unable to identify and seize goods to the value of the debt and where other enforcement remedies have proved unsuccessful or are not appropriate, the tax payer may be invited to attend a committal surgery at the Magistrates Court as a final opportunity to address the debt before the Council considers initiating committal proceedings.

22. Committal to prison

Where a person is over 18 years of age, and a liability order has been returned by an Enforcement Agent because they have been unable to identify and seize goods to the value of the debt, an application can be made to the Magistrates’ Court to commit that person to prison in accordance with regulation 47 of the Council Tax (Administration and Enforcement) Regulations 1992.

The Court will decide if at the time the debt was due and at the time of the hearing the tax payer had sufficient income to pay the liability.

The options available to the court are:

• To make an order of imprisonment of a maximum of 3 months, usually suspended on payment of a set amount at intervals set by the court;
• To allow the case to be withdrawn for other actions, for example insolvency, charging order or attachment of earnings;
• To remit some or all of the debt due to an ongoing inability to pay;
• To dismiss the case.

There are substantial costs involved with such an application and these may be payable by the tax payer.

If a tax payer does not attend a committal hearing the Court can issue a warrant of arrest.