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IN THE FIRST-TIER TRIBUNAL APPEAL: EA/2017/0019

GENERAL REGULATORY CHAMBER


(INFORMATION RIGHTS)

BETWEEN:

Appellant
and

THE INFORMATION COMMISSIONER


Respondent

EXHIBIT 4
17 February 2014 Cabinet report
CABINET

DATE 17th February 2014

REPORT OF Councillor Ros James


Portfolio holder for Citizens and
Inclusion

RESPONSIBLE OFFICER Steve Barrett Chief Finance Officer

SUBJECT Review of Council Tax court costs

STATUS Open

FORWARD PLAN REF NO. RES 02/14/03

CONTRIBUTION TO THE COUNCIL PLAN / STRATEGIC AIMS

The council keeps under review the level of court costs levied to residents who
have failed to pay Council Tax in accordance with requested instalments. The
council has a duty to ensure that the level of costs does not exceed reasonable
costs incurred in obtaining a liability order.

EXECUTIVE SUMMARY

This report requires members to execute their executive powers and agree the
level of additional costs to be levied for the financial year 2014/15, subject to
further approval by the Magistrates Court.

RECOMMENDATIONS

To approve the reduction in court costs from the current level of 70 to 60,
which has been calculated as being the reasonable sum incurred, subject to
approval from the Magistrates Court. This will be effective from the financial
year 2014/15.

REASONS FOR DECISION

The Council Tax (Administration & Enforcement) Regulations allow the council
to levy an additional fee which is equal to the amount of costs reasonably
incurred in making an application for a Liability Order through the Magistrates
Court. The level of recommended costs for 2014/15 is based on the most recent
activity and cost data, and represents a reduction of 10 due to a reduction in
operating costs combined with an increase in activity.
RISK ASSESSMENT

Failure to review the appropriate level of costs levied leaves the council at risk of
levying costs which exceed the overall costs of making applications for Liability
Orders. This could contravene government regulations and leave the council at
risk of challenge.

Crime and Disorder


No direct crime and disorder implications.

Human Rights
No direct implications on Human Rights.

Equality and Diversity


No direct implications on Equality and Diversity. An equality impact assessment has
been completed.

1. BACKGROUND AND ISSUES

In cases where Council Tax is not paid in accordance with instalments the
council may take further action to recover and enforce the outstanding
amount. The Council Tax (Administration & Enforcement) Regulations outline
the processes that the council must follow when payments are not made. If
the amount remains wholly or partly unpaid the council may apply to the
Magistrates Court for an order against the non-payer. The application is made
by making a complaint to the Magistrates Court and requesting the issue of a
summons directed to the non-payer to appear before the court to show why
the amount is unpaid.

The same regulations allow the council to levy an additional fee which is equal
to the amount of costs reasonably incurred in connection with the application.
The regulations do not specify what expenditure may or may not be included
within the level of cost charged to the non-payer. Typically the additional costs
include the sum paid to the magistrates court in respect of the application,
plus additional costs incurred as a result of additional activity required as a
result of non-payment, for example, additional printing & postage costs, ICT
costs and the estimated cost of staff time.

It is not practical to calculate the level of costs incurred in each individual case
and therefore a reasonable estimate must be made of the total of such costs,
divided by the estimated number of applications to be made for a summons.

In June 2013 the Department for Communities & Local Government published
Guidance to local councils on good practice in the collection of Council Tax
arrears. The guidance document states that in the interests of transparency
Local Authorities should be able to provide a breakdown on request, showing
how these costs are calculated.
The level of court costs currently charged by North East Lincolnshire Council
is 70. The current level of costs was agreed by Council as part of the budget
setting process for 2011/12.

In 2013/14, changes to Council Tax discounts for empty properties, and the
introduction of the Localised Council Tax Support scheme has led to an
increase in the number of accounts falling into arrears, and subsequent
applications for a Liability Order.

The increase in activity has occurred at the same time as the council is
looking to reduce its operating costs. Therefore, it is important that the level
of court costs is reviewed in order to ensure that costs levied do not exceed
costs incurred in making the application to the court. It is intended that costs
will, in future, be reviewed on an annual basis, in order to ensure that
changing budgets and activity levels are reflected in the level of costs
charged.

The Council recognises the difficulties some residents have encountered in


paying Council Tax as a result of Welfare Reform changes, and as a result
has been more flexible with instalment arrangements. In cases where
residents owe a modest amount, and have subsequently made an
arrangement which clears the balance within the financial year, costs have not
been applied. It is anticipated that such action will continue into 2014/15.

A breakdown detailing the current calculation is published on the councils


website, based on activity and costs for 2012/13. A similar calculation has
been made based on 2013/14 activity to date and the estimated final out-turn,
and this calculation forms the basis of the recommended level of costs to be
applied for 2014/15 (see appendix A).

2. OTHER OPTIONS CONSIDERED

Members may choose to levy a lower level of costs than that recommended,
however, this would mean that additional costs incurred by the Council due to
non-payment are borne by those Council Tax payers who pay on time in
accordance with their instalment plan.
A higher level of costs would leave the council open to legal challenge over
the reasonableness of its charges underthe Council Tax (Administration &
Enforcement) Regulations.

3. CONSULTATION WITH SCRUTINY

None

4. FINANCIAL IMPLICATIONS

The recommended level of costs charged for 2014/15 covers the best
estimate of the level of costs incurred in making an application for summons.
The overall estimated level of budgeted income from court costs is accounted
for in the Medium Term Financial Forecast.
5. LEGAL IMPLICATIONS

The legal implications arising from the recommendations are covered in the
main body of the report. Legal services supports the recommendation to
lower the level of additional costs for the reasons set out in the report and
note that these are in any event subject to further approval by the the
Magistrates Court. The fee must reflect the amount of costs the Council
reasonably incur when making an application for a liability order. Legal
services has considered the level of costs proposed and believes it to be in
line with costs incurred. The section on options deals with the risks arising
from setting either a lower or higher figure than that proposed. It is noted that
the level of fees is set annually and factors such as reduced operating costs
and activity levels must be taken into account when setting the fee in future
years.

6. HUMAN RESOURCES IMPLICATIONS

No direct Human Resources implications.

7. ENVIRONMENTAL SUSTAINABILITY IMPLICATIONS

None

8. WARD IMPLICATIONS

None

9. BACKGROUND PAPERS

Council Tax (Administration & Enforcement) Regulations


http://www.legislation.gov.uk/uksi/1992/613/contents/made

Guidance to local councils on good practice in the collection of Council Tax


arrears
https://www.gov.uk/government/publications/council-tax

10. CONTACT OFFICER(S)

Joanne Robinson, Local Taxation & Benefits Shared Service Manager


(01472) 323761
Paul Allen, Finance Service Manager, (01472) 323814

Councillor Ros James


Portfolio Holder for Citizens and Inclusion
Appendix A - summons cost calculation
A0191/ A0187/ A0184
A1549 A1551 Control
Council Debt &
Tax Recovery Monitoring Total

Gross Collection and Recovery expenditure


798,700 673,000 546,900 2,018,600

Less recharges between cost centres that


-
results in duplication of cost 31,782 31,782

Estimated enforcement costs budget codes


LL103 13,600 summons multiplied by 3 40,800 40,800

Enforcement Costs - staff and overheads (see


debt recovery salaries tab) 164,372 164,372

Collection costs for taxpayers who pay before


summons issued (see calculation tab) 575,189 575,189

Estimate of Control and monitoring time on


non council tax summons activity (80%) 437,520 437,520

Debt recovery costs for NDR/Housing


Benefit/Sundry debtors (30%) 140,348 140,348

Gross Recoverable costs (including liability


orders) 191,730 327,480 109,380 628,589
24% 49% 20% 31%

Further work to liability order (estimate at 5%


of Gross Recoverable costs) 31,429

Gross Recoverable costs 597,160

Estimated number of summons requested in 2013/14, where costs applied 10,000

Cost per summons 59.72

Cost rounded to nearest 60


Council Tax activity levels
Collection Collection
costs non cost
summons summons

Gross cost of Council Tax section 798,700

Less recharge from debt recovery - 31,782


Adjusted gross cost 766,918

50% of activity on routine billing activity 383,459 383,459 -

50% of activity on reminders/final bills/queries 383,459 191,730 191,730

575,189 191,730

Estimated no of reminders/final for 2013/14 39,176

Estimated no of council tax summons 13,600

No of reminders not resulting in summons 25,576 48%

No. of calls arising from issue of each summons is at least twice as many as for reminders, therfore

Weighted number of summons 27,200 52%

Adjusted total 52,776

ESTIMATE THAT NON ROUTINE BILLING ACTIVITY IS SPLIT 50/50 BETWEEN


THOSE PAYING ON TIME AND THOSE PROCEEDING TO SUMMONS