Debt Recovery Guidance for council tax, business rates and sundry debts

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

The administration, collection and recovery rests with the Director of Resources.

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.

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

• we offer four dates for direct debit as we recognise that this is a proven method for ensuring payments are made on time
• we offer a 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
• we will not refuse any payment which reduces the debt - however, if it is less than the requested amount recovery action may continue
• we may 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

We will apply to the Magistrates Court for Liability Orders where necessary to recover the debt. We will use the appropriate methods of enforcement available through Liability Orders including:

• taking control of goods, using enforcement agents
• insolvency proceedings
• committal to prison 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

Recovery process and procedures

The recovery process will be in accordance with the Local Government Finance Act 1988 and subsequent regulations & amendments)

When a ratepayer liable for non-domestic rates has not made the due payments, the Council will take the following action:

1. reminder

If a statutory instalment is not paid, we send a reminder notice giving seven days to bring the instalments up to date.

If the correct amount on the reminder is paid, within the time limit, but instalments fall behind a second time, then the right to pay by instalments is lost.

2. final notice

If a business rate account is in arrears and the right to pay by instalments has been lost, we send a final notice giving 7 days to pay in full.

3. summons

If the final notice remains unpaid, a minimum of 14 days after it has been issued, a summons will be sent which will include additional costs (an amount agreed by the Magistrates' Court, which is equal to the costs reasonably incurred, currently £75.00). Any increase in costs has to be authorised through the Magistrates Court.

Unless the Council has made a mistake in issuing the summons, proceedings will only be stopped if the debt and costs are paid in full prior to the Court date. At this stage, we still make arrangements to pay but this does not stop the application to the Court for a Liability Order. We will not refuse part payments to reduce the debt.

4. Liability Order

Once the council has obtained a Liability Order to back the debt, we may initiate a range of remedies to recover unpaid rates including:

• enforcement agent action - if the debtor has failed to make and maintain an agreed payment plan, we can instruct Enforcement Agents to recover the debt; in a process known as Taking Control of Goods, Enforcement Agents may seize and sell goods to the value of the outstanding debt, plus their fees - the additional charges involved are quite considerable and the debtor is held liable for them
• insolvency action - we may petition for bankruptcy or for the winding up of a company, depending on whether the debtor is an individual or a company
• committal to prison (individuals only) - where enforcement agent action has been unsuccessful the Council will consider issuing a committal summons for the debtor to be committed to prison for non-payment -this action would only be taken as a last resort

Up to summons stage, all staff can exercise their discretion by allowing a short period for payments to be brought up to date without progressing to the next stage of recovery. Alternatively, they may re-schedule a payment plan to start or finish later, provided the Council's position is not adversely affected and past payment performance indicates that the outcome is likely to be successful.

We always make it clear to ratepayers that recovery action will not be suspended pending any appeal they may have made to the Valuation Office Agency.

Insolvency and committal to prison are all dealt with on an individual basis and potential cases are considered by the Business Rates and Debt Manager or Recovery Team Leader before being referred to an authorised officer for approval.