When the Taking Control of Goods regulations came into effect in 2014, they not only provided a much clearer and fixed fee scale, they also introduced a fairer system whereby, in order to keep bailiff fees to the barest minimum, (of just £75) the debtor is given the opportunity of avoiding a personal bailiff visit (and an enforcement fee of £235 being applied) by paying the debt (including the Compliance Fee of £75) by the date outlined on the Notice of Enforcement....or alternatively, by agreeing a payment arrangement with the enforcement company. Most payment arrangements are for a short period of approx 3-4 months (sometimes even more).

Where problems have arisen since 2014, is that many people receiving a Notice of Enforcement from the bailiff company, try to avoid paying bailiff fees by visiting the local authorities website and making an online payment of just the debt owed to the council.

Such avoidance methods do not work.

This is because, the regulations are very specific in that once the Notice of Enforcement has been issued, the debt owed includes the compliance fee of £75. Furthermore, and this is again in the regulations, any payments made after the Notice of Enforcement has been issued must first be applied towards discharging the Compliance fee (of £75).

The bottom line is that if a payment is made to a local authority (minus bailiff fees) after the date on when a Notice of Enforcement is issued, the enforcement company are entitled to their compliance fee (of £75). The effect being that any payment made to a local authority (minus bailiff fees) must be considered as merely a part payment and accordingly, the warrant is not satisfied…and bailiff enforcement can.....and will continue.

Since 2014, debt avoidance websites have inundated local authorities with many hundreds of Freedom of Information requests enquiring as to whether councils retain these online payment or pass the compliance fee to the enforcement company etc. These pointless requests have achieved absolutely nothing.

There have been quite a few Local Government Ombudsman’s decisions regarding this scenario but a very recent one is of interest because, in this particular case, the local authority adjusted the amount of the Liability Order but failed to inform the enforcement company. The debtor also paid the council direct (minus bailiffs).

A have copied the decision in the next post.

The following decision is a very new one (released at the end of last week) and relates to a complaint made to Manchester City Council:

http://www.lgo.org.uk/decisions/benefits-and-tax/council-tax/17-003-403

Oh please. It is like going back on a time machine.

 

Regulations DO NOT state that the compliance fee should be discharged first if payment is made directly to the council.

 

Regulations actually state that the compliance fee should be discharged first out of proceeds if a sale takes place. If no sale takes place, there is no requirement on the creditor to discharge the compliance fee and many councils do not.

 

This may well be an unintended consequence of the new(ish) regulations as I believe the intention was to ensure that the compliance fee was paid to the bailiffs. However, there is no obligation on the creditor to do so and indeed, many do not.

 

There is indeed no 'unintended consequences' of the regulations.

The government have been very clear with their intention that the 'compliance fee' of £75 should be deducted first. A very important part of any regulations is the Explanatory Memorandum. In this respect, the following is from Item number 8.3 of the Explanatory Memorandum supporting the Taking Control of Goods Regulations 2014:

http://www.legislation.gov.uk/uksi/2014/1/pdfs/uksiem_20140001_en.pdf

8.3 The consultation response stated that in cases where the proceeds of enforcement are less than the amount outstanding, they should be distributed on a pro-rata basis between creditor and enforcement agent (regarding the outstanding debt and the enforcement fees and disbursements respectively).

 

However, it has since been demonstrated that this would cause enforcement agents to operate at a loss for some time before they recovered their fees, undermining the fee structure model by significantly delaying remuneration and preventing the necessary investment in enforcement businesses required to provide a sustainable service. Without this, successful enforcement could potentially decline significantly and enforcement agents may be encouraged to act in an aggressive manner in order to try and recoup the entire debt.

 

It was therefore decided that enforcement agents should be paid the compliance stage in full first, followed by a pro-rata division of proceeds between enforcement agent and creditor.

PS: Please note the reference to 'proceeds of enforcement' and NOT....'proceeds from a sale'.

The following decision is a very new one (released at the end of last week) and relates to a complaint made to Manchester City Council:

 

 

The complaint

 

The complainant, whom I refer to as Ms X, says the Council should refund bailiff fees of £310 because she had already paid the council tax arrears.

 

How I considered this complaint

 

I read the complaint and the Council’s replies. I invited Ms X to comment on a draft of this decision.

 

What I found

 

If someone does not pay their council tax the Council can ask the magistrates for a liability order. A liability order is a court order confirming the arrears must be paid. Once the Council has a liability order it can ask enforcement agents (bailiffs) to collect the debt.

 

Bailiffs charge fees. The fees are specified in the regulations. When the bailiffs first contact the debtor there is a compliance fee of £75. If the debtor does not pay the arrears, and the fee, the bailiffs progress to the enforcement stage and charge an additional £235. The law says the person must pay the arrears and the fees.

 

What happened

 

The magistrates granted a liability order in November 2015 for council tax arrears of £456. The Council wrote to Ms X in December. Ms X did not respond and the Council passed the debt to bailiffs in January. The bailiffs wrote to Ms X in January and charged £75. The bailiffs wrote again in February and warned they would visit. Ms X did not pay the debt and the bailiffs advanced to the enforcement stage on 2 March. This meant the bailiff fees increased to £310 and on 2 March the total debt was £766.

 

On 14 March Ms X applied for a student discount because there was a student in the household. The Council awarded the discount and reduced the council tax arrears to £343. This reduced the total debt to £653. The Council did not tell the bailiffs it had reduced the arrears to £343. Ms X paid £343 to the Council on 31 March.

 

Bailiffs visited in July. Ms X paid £423 to the bailiffs. This included fees of £310. This meant Ms X overpaid by £113. The Council refunded £113 to Ms X in September.

 

Ms X wants the Council to refund the £310 because she paid the council tax arrears in March.

 

Assessment

There was some fault by the Council because it failed to tell the bailiffs that it had reduced the arrears. If it had informed the bailiffs then, during the visit, the bailiffs would have asked for £310 rather than £423.

 

This error has not caused an injustice.

This is because the Council has refunded the £113 and because the fees of £310 had already been incurred before Ms X paid the arrears in March.

 

Ms X could have avoided paying any bailiff fees if she had paid the arrears before the account had been passed to bailiffs. However, once bailiffs were involved, Ms X could only fully clear the debt

by paying the council tax and the fees.

.

 

Final decision

 

I will not start an investigation because there is insufficient evidence of injustice.

 

http://www.lgo.org.uk/decisions/benefits-and-tax/council-tax/17-003-403

What is interesting about this is the mention of injustice to the debtor is mentioned. The error did not cause enforcement to end, it did not fail as some put it.

The only sums recovered were the damages incurred, the rest of the enforcement debt was still due, including the bailiffs fees.

Yes someone tried this in Bola.

The judge said that the sale part of the section does not apply, which it doesn't if no sale has been made. however the rest does because there are still proceeds which were recovered by the bailiff.

As you say section 13 does say goods sold, but there are no goods sold , so this section does not apply.

However the rest of section 13 does and in particular regarding compliance fees and pro rata payment.

Section 13 does not just apply to sale. Look at the title.

Page 49-50 of the case, starts at the bottom of 49. Do we need to copy it on here ?

Page 49-50 of the case, starts at the bottom of 49. Do we need to copy it on here ?

If I can just elaborate a little.

The legal case is Bola v Harrow Council and Newlyn. The specific reference that you refer to is in the transcript and not in the judgment. An outline of the case and a copy of the judgment can be read in the following link:

https://www.consumeractiongroup.co.uk/forum/showthread.php?477808-Paying-the-creditor-direct-to-avoid-paying-bailiff-fees-has-landed-a-debtor-with-a-%A37-000-cost-order.

Mr Bola's solicitor had attempted to argue the exact same point as referred to above by the poster 'Alreadyexists'. District Judge Carr rejected that argument. The loss was almost certainly a very bitter blow to those individuals and advisers seeing to explore a 'debt avoidance' loophole in the regulations.

If Alreadyexists wishes to argue further, I will post up the part of the transcript outlining the District Judge's comments on this particular point.

The fact remains that as outlined in the Explanatory Memorandum supporting the Taking Control of Goods Regulations 2014, the government sought to discourage 'aggressive behaviour' by providing that in almost every case the enforcement agents should be paid the compliance fee in full first.

In the very rare event (less than 1% of cases) that proceeds came from the actual sale of goods, the position would be that the auctioneers fees would be paid first......followed by the enforcement agents compliance fee. It really is that simple.

PS: The comment from District Judge Carr in para 14 of his judgment states this:

Having considered carefully the provisions, I find that I agree with the defendant, and no amount of reinterpretation of the Regulations, it seems to me, comes to the aid of the claimant.

 

In other words, no purposeful reading of the Regulations can, it seems to me, support the claimant's contention.

 

It is clear to me that whether the £172-odd that was paid was apportioned or not (and it is accepted by the defendants that it was not, that Harrow kept the full amount in payment of their debt) is irrelevant to the right or the power of Newlyn to enforce what had then become due by reason of their appointment, being the compliance fee.

Can I just point out that I am not arguing any point. I have no point to argue either way. I simply wished to highlight the misinformation regarding the so called requirement to divide payments made directly. There is no such requirement and it is clearly an unintended consequence.

NO it isn't, payments are not supposed to be made directly to the creditor in any case. The only benefit the debtor has in doing so, is that the EA may not be aware of such a payment and continue to enforce for the full sum.

Isn't that all that happened here ?

NO it isn't, payments are not supposed to be made directly to the creditor in any case. The only benefit the debtor has in doing so, is that the EA may not be aware of such a payment and continue to enforce for the full sum.

It may help if I refer to the comments from District Judge Carr in his transcript:

Page 35: District Judge Carr questions Mr Bola:

Page 56:

 

It is of course stretching stupidity to its outer limits to suggest that payments may not be made to the creditor.

District Judge Carr appears to disgarees with your theory. I do too.

I think you are getting over exited please calm down.

Stretching stupidity, really ? What does that mean.

Anyway. No one is saying that there is any legal prerequisite to pay the bailiff. But nevertheless it is how the procedure is designed to work.

If the debtor decides to follow your "advice", contrary to what is the correct payment method, he cannot really complain at the result.

I have never, ever advised anyone to make payment to a creditor directly. I have advised and assisted in the method of "sitting it out", when a debtor has expressed a desire to exercise their lawful right to avoid paying bailiff fees.

 

On what grounds do you base your rather bold (and incorrect) statement on how the procedure was designed to work?

Well my reason for presuming this is based on what you have said on this thread, now you seem to recant. So are you saying that it is a bad idea to pay direct?

Oh I know how the procedure is designed to work because I read the legislation, and it occurs to me that parliament intends that the bailiff gets paid. Otherwise it would have not gone to the trouble of including fees regulations etc.