Liability Orders...Government wants to substantially increase Attachment of Earnings Orders...Seeking help from HMRC.

[Bailiff Advice]

With over 3.5 million Liability Orders being issued each year for arrears of council tax, this new thread is of huge importance as the following proposal from the government will affect many thousands of council tax payers. For this reason I would hope that the moderators will allow this thread to remain on the main section of the forum for a few days before transferring it to the new 'bailiff discussion' section.

 

Today the Department for Communities and Local Government (DCLG) announced that they have issued a Consultation paper regarding proposals to extend the data sharing facility with HMRC to enable them to share data pertaining to higher income debtors. The purpose of which is to enable the local authority to make an attachment of earnings order against the debtors employer.

[Bailiff Advice]

The current position is that where there is a council taxpayer in arrears, there exists the right of the local authority to be able to approach HMRC to disclose data that would assist the local authority in setting up a direct deduction from benefits. There is no data sharing ability that permits the local authority to obtain data from HMRC pertaining to higher income debtors.

 

What is being proposed:

 

It is proposed that once a Liability Order has been obtained, the taxpayer will be given 14 days to voluntarily share their employment information with the council to assist the council in making an attachment of earnings order.

 

If the taxpayers fails to provide the information the government proposes to allow HMRC to share the employment information with councils.

 

The Consultation closes on 18th November.

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/466386/150930_Improving_Efficiency_of_Council_Tax_collection_Consultation_Doc.pdf

[brassnecked]

All well and good providing there is sufficient income to attach to.

[mikeymack2002]

Why would an attachment of earnings be issued against the debtor's employer?

 

Slightly confused on this point...

[Queens_king]

May ask if non payment of Council Tax is Civil or Criminal??

 

If it is civil then surely HMRC would be in breach of the Data Protection Act by the disclosure and the local authority would need to obtain a warrant from the court to obtain the information

[Bailiff Advice]

All well and good providing there is sufficient income to attach to.

 

I quite agree. The taxpayers who will escape an AOE will be the self employed and given the very limited exemption to vehicles (just £1,350) they could suffer.

 

The consultation document is very short and clear and the consultation period is very limited indeed (just 5 weeks) so I would assume that any changes will come under the 'One Year Review'.

 

Most important though is the reference to a '14 day' letter. As many will know, under the new regulations that came into effect in April 2014, the government removed the '14 day' letter from the council tax regulations and instead, provided that as soon as a Liability Order had been obtained that the Liability Order can be passed straight over to the enforcement company and that the EA would be legally required to send a Notice of Enforcement. A period of much less than '14 days' is permitted...(the regulations stating that the period must be a minimum of 7 clear days) and that when sending the NoE a Compliance Fee of £75 can be charged.

 

The consultation paper provides that a '14 day' letter is to be sent by the council following the granting of the Liability Order. With local authorities complaining that they have limited financial resources this is an additional burden and furthermore, more staff would be be needed to process the large number of Attachment of Earnings?

[Bailiff Advice]

May ask if non payment of Council Tax is Civil or Criminal??

 

If it is civil then surely HMRC would be in breach of the Data Protection Act by the disclosure and the local authority would need to obtain a warrant from the court to obtain the information

 

It is a civil debt until the point where payment is refused and the taxpayer is summoned to the Magistrate Court for consideration of committal proceedings. In simple terms, it is a civil debt that has the ultimate sanction of criminal proceedings (a prison sentence).

 

I have no idea about the Data Protection concerns but would assume that this must already be satisfied given that HMRC (and DWP) also have data sharing obligations with local authorities in relation to taxpayers who are on benefits and an attachment against their benefits is required (of £3.65 per week).

[mikeymack2002]

Can you clear up the £3.65 rule regards to benefits, as I know a number of pensioners that have 2 or more pensions and live in sheltered accommodation, they are currently having to pay significantly more than this for several years arrears. These cases are with EA's and the figures paid make them fall into the poverty group now thx in advance

 

 

MM

[Bailiff Advice]

Why would an attachment of earnings be issued against the debtor's employer?

 

Slightly confused on this point...

 

Because regulations provide that once a Liability Order has been granted the local authority can legally recover the debt by various methods. The most popular method is of course referring the Liability Order to an enforcement agency for the purpose of 'taking control' of the debtors goods. The other method of recovering the debt is to apply direct to the taxpayers employer to order them to deduct a fixed sum from the taxpayers salary on a monthly basis.

 

AOE's have been fraught with difficulties for many years mainly because the local authorities do not have up to date and accurate information regarding the taxpayers employment details and they have been hampered in this task by the inability to 'share' data with HMRC. I mentioned on this forum a year or so ago that changes have been made to the data sharing obligations and that this was being piloted with Magistrate Court fines. It would seem that the 'pilots' have been a success and the government want to roll this out nationally.

[Bailiff Advice]

If you could possibly add a link to this so I can forward this to them to look into as this could help many others as well.

 

I posted a link in my initial post. Here it is again:

 

https://www.gov.uk/government/upload...tation_Doc.pdf

[sillygirl1]

Seeing as many councils use Liabilitiy Orders as their PRIMARY means of collecting council tax shouldn't that point be addressed first - ie FINE the councils who have over x amount of liability orders in the first place.

[Bailiff Advice]

Once a Liability Order has been obtained, the 1992 regulations (section 56) provide that the taxpayer is under a legal duty to provide when request employment details. If they refuse to do so, the taxpayer can face a criminal court fine. Yesterday I was sent details of one such fine that was issued a few days ago by Cheshire East Magistrates. The amount that the taxpayer has been fined is as follows:

 

Amount of Fine: £220

Victims Surcharge: £22

 

Costs: £75

 

Criminal Court Charge: £150

Total amount payable: £467

[Coughdrop]

Very interesting, especially as it does not once mention EA's, or their use as far as I can see. It does mention LA's consider current processes to be inhibited by current legislation.

 

The clear implication of this is that more AOE's will be used instead of bailiffs. This part is critical:

 

"Where a liability order has been obtained, the council taxpayer will have 14 days to voluntarily share employment information with the council to enable the council to make an attachment to earnings. If this does not happen, the Government proposes to allow HMRC to share employment information with councils. This would help to avoid further court action ............"

 

So as I see it, the government are looking for AOE's to be the standard method of collection. Debtors will have 14 days to provide information vountarily; if they fail to do so, the LA will be able to acquire the information to put an AOE in place anyway.

 

They seem to want to bypass EA's entirely from this comment. BA - do you know whether or not this is the intent? The enforcement companies would be fuming.

 

I know it's an entirely separate subject, but why, rather than faff about with 3% of Council Tax collection, doesn't the government do something about the gross avoidance of corporation tax on profits earned in this country? It would be money far better spent and bring in vastly more revenue. Sorry to mention that, but if we're talking about collecting taxes owed, it is a genuine part of the overall discussion.

[mikeymack2002]

The LA does not need to use the EA regardless they have that OPTION to use them. The fact they do could have something to do with the alleged back hander scandal and I cannot see why they do not use the AoE/B in the first place. Then the debtor would only face a fee of just £1-00 per deduction. Surely this is the better option compared to the use of the EA and the fees amounting to well over £200!

 

 

If given the chance this is the option that I would take, it has many more benefits to both sides in as much as the debtor actually has some money to pay other priority bills. then there is an option to suspend a second LO compared to more fees and distress caused by using the EA. As many LA's state on their web pages the EA is a last resort so why are LO's not used more then? Now that would be a great reply from many of the LA's that use the EA!!!

[Peterbard]

I should mention by way fo ballance, that some people may not prefer an attachment of earning, the thought of their employer knowing may have social and even employment related consequences,

[Coughdrop]

A cynic would say the government might be using this method intentionally to encourage you to pay. It saves the issue of affordable repayment arrangements - I wonder how it would stand in a DMP, will it take precedence over other priority debts? Will it stop others accepting a DMP because the CT goes directly from the salary?

[Peterbard]

Not sure TBH

As you know DMP providers consider the council tax to be a priority debt so is not included in the plan, I would imagine that the same would be true for a judgment made to recover CT debt.

 

It may be beneficial under some circumstances , as it would reduce the disposable income and the plan would be calculated on the new figure perhaps offsetting some of the repayment to the court.

I have talked to many people who are relying on this to counter the increase in mortgage rates later next year.

[Bailiff Advice]

The LA does not need to use the EA regardless they have that OPTION to use them. The fact they do could have something to do with the alleged back hander scandal and I cannot see why they do not use the AoE/B in the first place. Then the debtor would only face a fee of just £1-00 per deduction. Surely this is the better option compared to the use of the EA and the fees amounting to well over £200!

 

 

If given the chance this is the option that I would take, it has many more benefits to both sides in as much as the debtor actually has some money to pay other priority bills. then there is an option to suspend a second LO compared to more fees and distress caused by using the EA. As many LA's state on their web pages the EA is a last resort so why are LO's not used more then? Now that would be a great reply from many of the LA's that use the EA!!!

 

There are many reasons why Attachment of Earnings are not commonly used.

 

Firstly, as outlined in the thread, at present.....local authorities have very little knowledge of employment details and are hoping that they can have 'data sharing' with HMRC to make identification simpler.

 

Secondly, many people are on 'zero hours' contracts. An AOE cannot apply in such cases.

 

Thirdly, thousands of debtors are in receipt of Tax Credits. Attachments cannot be made against such debtors.

 

Lastly, an AOE cannot be made against a debtor who is self employed.

 

PS: With regards to your comment about 'backhanders', this of course was concerning Harrow Council. That LA were heavily criticised in the House of Commons for this dreadful practice and it has stopped. That is not to say that other financially stretched LA's will be looking at ways of being re-imbursed for passing cases to EA'a. CIVEA monitor all tender document to ensure that this underhand practice does not happen again.

[Bailiff Advice]

 

So as I see it, the government are looking for AOE's to be the standard method of collection. Debtors will have 14 days to provide information vountarily; if they fail to do so, the LA will be able to acquire the information to put an AOE in place anyway.

 

They seem to want to bypass EA's entirely from this comment. BA - do you know whether or not this is the intent? The enforcement companies would be fuming.

 

Good comment Coughdrop.

 

The way that I see it is that those who are deemed to be in a financial position to be able to pay (i.e taxpayers who are in paid employment) will in future be given another chance of paying by being sent a letter asking them to provide their employment details so that an AOE can be set up. Personally, I believe that many debtors receiving such letters will likely pay in full on receipt of the letter or alternatively, will contact the LA to offer a repayment proposal. There is huge potential problem. The taxpayers that this proposal is aimed at are those who provide the 'bread and butter' to enforcement companies. This category will usually respond to the NoE and either pay in full straight away, or over a very short period.

 

HMCTS have been piloting the same scheme for a while now with criminal court fine defaulters and what seems to be happening is that defaulters who are in paid employment are not having warrants issued and instead, more warrants are issued to defaulters who for once reason or another cannot be subject to an AOE (those in receipt of Tax Credits, zero hours contracts and the self employed).

[Bailiff Advice]

I sincerely hope that the government does not give in the representation being made to them to allow attachments to be made to benefits without the need to first obtain a Liability Order.

[mikeymack2002]

Thanks for the added information re Harrow.

 

All I can say is that the issue regarding CT collection will always cause a heated debate. Over the past few months I have had to adjust and learn how to handle finances on an even tighter budget. It's just the beginning is all of this ....

[caledfwlch]

Thanks for the added information re Harrow.

 

All I can say is that the issue regarding CT collection will always cause a heated debate. Over the past few months I have had to adjust and learn how to handle finances on an even tighter budget. It's just the beginning is all of this ....

 

The bailiff system could so easily be replaced for non commercial/business debts, save a fortune, hassle, and end a backwards system based on misery, harassment and intimidation.

 

You simply recover debt by an affordable and fair system of Attachments to Earnings and Benefits, which would initiate with a letter giving 14 days to make payment in full, no door knockings at 6am, no cars and homes being ransacked, a fair, just system for the 21st century. It is quite amazing and horrifying to think that Robin Hood's greatest enemy, other than King John, the Sheriff of Nottingham, who of course is basically a medieval County Court Bailiff, living in a time of extreme brutality and violence, especially to Peasants, where the powers and actions of the State and its employees knew almost no bounds, or limits, yet, that wicked Sheriff, a vicious thug had LESS powers than any idiot with criminal convictions who gets hired by a private almost outside the law private corporation, here in 2015. It's astonishing.

 

Though amazingly, we are the lucky ones, French "Hussiers" who at least are Civil Servants, from what I understand have horrific and incredibly unjust powers, that probably give the envious owners and employees of companies like Marston's wet dreams.

 

This is a rare situation, but apparantly can happen, say you owe a civil/private debt of 6 or 7,000 euros to a French credit card company and have been ignoring the Hussier. You outright own a 3 bedroom house worth 130,000 Euros. You go out shopping, get home, and find the Hussier has come, emptied out your house, and with a big smile he tells you he has changed the locks as he has "reposessed" your house. And it will be sold to pay the 7000 debt. It's hard to find info in english, but there is a lot of suggestion that you won't see any money back from the forced sale, you have lost a 130,000 house!!!

 

On the other hand, unlike in the UK, the Hussier's are so good at their job, and in providing genuine affordable payment plans, that only out of every 100 cases of their version of "taking control of goods" only 1 case will likely end with the goods being removed!

 

Someone in Scotland, I think it was for the SNP did a calculation a few years ago. You change Council Tax to a "local" income tax, recovered at source from your employer, just the same as Income Tax/Nat Insurance etc. This would result in 100% collection of Council Tax, and would also save each authority millions since no Council would need a Council Tax Arrears department, the council tax department as a whole would only need a couple of admin bods to deal with potential problems, the self employed, etc and there would be absolutely no need for a Council Tax Benefit department, again saving fortunes, and ridiculous expensive accounting procedures, of removing the benefit from 1 account, into another. If your not working, your not paying council tax, easy.

 

A typical weekly figure of Council Tax is about £20 a week per household. The new system would do away with Bands which are extremely unfair (why should someone on a low income be paying a tax based on the value of the private home they are renting, they wont see the value, the owner will) Under the new system, the tax would be £5 a week. So even if 4 adults live together in a home and are all in full employment, their combined weekly tax would still not be any higher than before. There are then lots of follow on benefits, court time freed up, end of committal to prison, except for self employed, stuff like that.

[brassnecked]

Bear in mind a council will regard Council tax arrears a priority that is superior to any mortgage or rent arrears, after all you can only be evicted for those, but can go to jail in extremis for Council tax. the council couldn't care less if you cannot pay your mortgage or rent so long as they get the council tax.

[Bailiff Advice]

Bear in mind a council will regard Council tax arrears a priority that is superior to any mortgage or rent arrears, after all you can only be evicted for those, but can go to jail in extremis for Council tax. the council couldn't care less if you cannot pay your mortgage or rent so long as they get the council tax.

 

And the councils are actively looking at ways in which to increase revenue. The recent Judicial review (Reverend Paul Nicolson) will naturally impact greatly on future revenue given that the LA's will have to provide evidence to the Magistrate's Court (most likely from their auditors) in order to demonstrate that the summons costs etc have been reasonable incurred.

 

Reviewing some of the background documentation over the weekend concerning this surprise consultation, it would seem that representation has been made to the government to not only allow local authorities to have access to HMRC data but to also make the necessary changes to legislation to provide that:

 

If the taxpayer is employed, to allow attachments to be made to the tax credit element of Universal Credit

 

and:

 

Where the taxpayer is not employed and is in receipt of benefits, to allow an attachment (to the taxpayers benefit's) to be made.......without the need to first obtain a liability order.

[Bailiff Advice]

 

I know it's an entirely separate subject, but why, rather than faff about with 3% of Council Tax collection, doesn't the government do something about the gross avoidance of corporation tax on profits earned in this country?

 

Your above comment came a day before the news report this morning that Google has paid Corporation Tax this year of just £5k.