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

Debt recovery

Where legislation permits, the Council will seek to levy and recover from the debtor all costs/fees that are legitimately due from the debtor to the Authority or its agents. Only in exceptional cases, where it would not be in the public interest to pursue costs/fees, will they be waived.

Any enforcement action must be proportional to the debt, consistent in terms of advice given; use of our powers; and the recovery procedures used. The reason for any enforcement actions should be clearly understood by the debtor.

An opportunity must be given to discuss what is required to comply with the law before any formal enforcement action is taken. An explanation of any rights of appeal against formal enforcement action must also be given, prior to or at the time action is taken.

Collection agencies or Enforcement Agents used by the Council must comply with Ministry of Justices' 'National Standards for Enforcement Agents'.

Writing off bad debts

If the debt remains unpaid, after exhausting all the appropriate recovery methods as outlined in this guidance, the council recognises that it is good practice to promptly and regularly write this debt off.

The Council will seek to minimise the cost of write-offs to the local Council Tax payers by taking the necessary action to recover what is due. All debts will be subject to recovery, collection and legal procedures as outlined in this guidance.

Examples of cases where debts may be written off can be for the following reasons. This is not an exhaustive list:

• debt remitted by a Magistrate
• the Council has evidence to confirm the debtor is suffering a severe physical or mental illness which renders enforcement action inappropriate
• the debt is not cost-effective to pursue due to small balance
• the debt is not cost-effective to pursue due to the likelihood of payment balanced against the cost of proceedings
• the claimant has died and there are no or insufficient funds in the estate to settle the debt
• the claimant is subject to formal insolvency proceedings and there is little likelihood of a dividend
• the debt collection agent or enforcement agent states the debt is unable to be collected
• legal representatives state the debt is unable to be collected

In accordance with the Constitution, irrecoverable debts can be written off under the following delegations:

• Council Tax and Benefits Manager and Business Rates and Debt Manager up to £499
• Revenues and Benefits Service Manager £500 to £4,999
• Revenues and Benefits Service Manager in conjunction with Head of Customer Services £5,000 to £9,999
• Head of Customer Services in conjunction with S151 Officer £10,000 to £19,999
• Leader of the Council in conjunction with S151 Officer £20,000 to £49,999
• Cabinet - £50,000 and above

Debts to be written off will be listed in a schedule for the appropriate approval as outlined above on a regular basis.

The schedule will detail the value of each debt, age of the debt, action taken and the reason for the write off request.

If the debt has been written off and a further payment is received, the income must be credited to the appropriate bad debt code. The debt should be reinstated for the balance outstanding. All accounts will be written off against the income code against which they were originally raised.

For sundry debts, the VAT on such write offs will be recovered in accordance with the rules issued by HM Revenues & Customs.