Council Tax and National Non Domestic Rates - Insolvency Policy
Councillor Joyce Plummer, Portfolio Holder for Resources, provided a report to seek Cabinet approval for the adoption of a new Council Tax and National Non Domestic Rates Insolvency Policy – replacing a previous version from 2012
Approval of the report was not a key decision.
Reason for Decision
The Council Tax and National Non Domestic Rates (business rates) Collection and Recovery Policy provides a foundation for our operations as it outlines the service that taxpayers can expect to receive as well as a transparent structure for the collection and recovery of tax due to the Council; a function which is essential to the funding of public services.
Reduced Government funding places greater emphasis each year on the importance of collecting and recovering Council Tax and Business Rates and as further pilots for the local retention of Business Rates continue to refine the Government’s intentions for Business Rate retention schemes, it is required that the Council’s policies reflect its practices and essential that all polices provide for a robust but fair collection and recovery process.
The Council Tax and National Non Domestic Rates Insolvency Policy sets out the Council’s main processes and guidance on it practices for ratepayers when dealing with Insolvency for Council Tax and NNDR liabilities.
In 2019/20, the Council have examined 25 accounts to determine whether they meet the legal criteria for commencement of insolvency, winding up or bankruptcy proceedings (“insolvency”). Four insolvency hearings were scheduled for December 2019 with a further four cases awaiting hearing dates. In total, we have served 17 statutory demands (the preliminary step in bankruptcy proceedings) with a total value of over £112,000.
While the overall goal for insolvency is payment of arrears, the initiation of the insolvency process has meant that a number of debtors have engaged with us when other contact methods at our disposal in the recovery of arrears have not provided enough incentive to contact us and deal with the debts.
The new policy differs from the 2012 policy in that it includes changes made to debt thresholds for individuals, updated references to Insolvency Rules 2016 and an updated pro forma for officers to use. In the last 12 months, the Revenues Team working alongside colleagues in Legal Services have increased the Council’s efforts to recover debt via insolvency and while in general the Council’s procedures remain largely the same, smaller incremental changes such as these warranted a review of the policy as a whole.
Alternative Options considered and Reasons for Rejection
Collection and Recovery of Council Tax and business rates works within legislative frameworks and the Council adopted its current guidelines in 2012. Remaining with this policy does not affect the Council’s ability to collect and recover local taxes however the incremental changes made since 2012 means that regular update and review provides a more accurate reflection of everyday practices.
The Insolvency Policy has been updated to reflect guidance provided by the Local Government and Social Care Ombudsman issued as a result of their findings from complaints regarding the handling of insolvency proceedings by local authorities. The guidance recommends that a robust, up to date procedure is in place and that all information, inquiries and account files are ordered in such a way as to demonstrate the Council’s consistency of decision making and justification for insolvency – this is reflected in the updated referral forms and policy.
Resolved - That the Council Tax and National Non Domestic Rates Insolvency Policy set out at Appendix 1 to the report be approved and adopted.