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Income and Debt Management Policy

This policy sets out how the Council will process income and recover debt.

IN THIS ARTICLE

1. Introduction

1.1 The Council is being increasingly commercial in every aspect and service. We balance the importance of supporting our vulnerable customers whilst increasing our income and streamlining processes.

1.2 It is important that the Council offers a wide range of easy payment methods to our customers which are available 24 hours a day to aid swift payment in a safe and secure way. The options available to our customers are continually reviewed and improved.

1.3 The Income and Corporate Debt Teams manage services on behalf of other services and organisations. Specific Service Level Agreements will be in place for these services.

1.4 This policy covers the collection and procedures of the following debts:

  • Council Tax
  • Business Rates (NNDR)
  • Housing Benefit Overpayment
  • Sundry Debts (including Commercial Rent)
  • Penalty charge notices
  • Mortgages and Shared Ownership Schemes

2.0 Policy Aims

  • To ensure that the Council bill/invoice, collect and recover all debts in an economic, effective and efficient manner in accordance to legislation and best practice
  • To ensure that all customers will be treated fairly and objectively
  • To provide consistent guidelines and procedures
  • To set out preferred payment options which are cost effective and support prompt payments whilst enabling payments to be made 24 hours a day, 7 days a week
  • Advise and assist customers to avoid debt issues before they arise
  • Make pro-active contact whenever possible, by text, emails or telephone to ensure early intervention and payment

3.0 Billing and invoicing arrangements

3.1 There is a legal duty placed on the Council to bill for Council Tax and Non Domestic Rates (Business Rates) in accordance with legislation. The processes are automated and managed by the Technical Control Team and the Income Team.

3.2 Sundry (Commercial) debts are more varied and can be dealt with by the Income Team in liaison with the individual services.

3.3 The below table shows the billing and recovery process in terms of team responsibility for the different types of debt.

  Council Tax Business Rates Housing Benefit overpayments Sundry debts
Account administration Council Tax Team Business Rates Team Housing Benefit Team Individual service area
Systems support Technical Team Technical Team Technical Team Finance
Billing Technical Team Technical Team Technical Team Income Team
Payment processing Income Team Income Team Income Team Income Team
Debt recovery Corporate Debt Team Business Rates Team Housing Benefit Team Income Team

For all types of income the following principles must be followed:

  • When goods or services are being provided payments should always be made up front of service delivery
  • For charges relating to hire of goods or premises a reasonable deposit should be taken on booking to cover any potential damage and the full cost of hire
  • Services should always consider the risk of non-payment and should actively monitor customer accounts and payment activities to highlight possible accumulation of debts

4.0 Methods of payment

4.1 The Council offers the following payment methods:

  • Direct debit
  • BACS
  • Online payments
  • Automated telephone line payments

4.2 Services should remove any payment options from promotional materials, bills or other correspondence other than the preferred payment methods. For recurring or regular charges Direct Debit must be promoted as the payment option. For one off charges an upfront debit card internet payment should be promoted followed by other self-serve options.

4.3 It is acknowledged that there may be exceptional circumstances where payments would be received in a method that is not listed above for example if a customer is very vulnerable or if they were in a formal enforcement process.

5.0 Recovery of unpaid debts

5.1 For a variety of reasons, revenue due to the Council will not be paid on time. The Corporate Debt Team and individual services must commence recovery action as soon as possible to maximise the probability of debt recovery.

5.2 Reminders will use nudge and persuasive techniques that are most likely to attract prompt payment.

6.0 Council Tax and Business Rates Process

Debt recovery process

  1. Demand Notice
  2. Reminder Notice
  3. Final Notice
  4. Summons with £57.50 costs*
  5. Magistrates' Court and Liability Order with £35 costs*
  6. Attachment of earnings and benefits
  7. Enforcement agent (bailiffs)

Alternative debt recovery process

  1. Demand Notice
  2. Reminder Notice
  3. Final Notice
  4. Summons with £57.50 costs*
  5. Magistrates' Court and Liability Order with £35 costs*
  6. Enforcement agent (bialiffs)
  7. Committal proceedings
  8. Charging Order

*Please note that Summons and Liability Order costs are subject to review prior to April 2019. The Council calculates the actual cost of issuing the documents and this is recovered as part of the debt. The Council will keep costs to a minimum where possible.

7.0 Sundry Debt Processes

7.1 In the cases of sundry debts it is the service or relevant manager who should decide whether enforcement action should be taken. The Income Team will inform services of any debts owing to them and they should respond to say whether each case should then be enforced.

Sundry debt process

  • Invoice
  • Reminder after 31 days
  • Final reminder after 14 days. Threat of court action
  • Collection agents after 10 days
  • Service decision of action to be taken
  • Money claim to obtain a CCJ at County Court
  • Instruct High Court Bailiffs

Alternative debt process

  • Invoice
  • Reminder after 31 days
  • Final reminder after 14 days. Threat of court action
  • Collection agents after 10 days
  • Service decision of action to be taken
  • Write off

7.2 Actions within sundry debt recovery should be complete in a timely manner. Where delays of over 28 days past the due date are encountered at any stage, the reasons should be detailed within the case notes on system.

7.3 Forfeiture can also be considered for the recovery of commercial rent. This is where the Council will forfeit a lease due to non-payment of rent. The Council will instruct an Enforcement Agent to carry out the process of securing the property.

8.0 Housing Benefit Overpayment

8.1 A Housing Benefit Overpayment is where an individual has been overpaid benefit for a period that they were not entitled.

8.2 A deduction from the claimant’s weekly Housing Benefit shall be set following Housing Benefit Regulations. The claimant will receive notification that the overpayment will be recovered in this way.

8.3 Where recovery is not possible from existing Housing Benefit an invoice is issued to the claimant or landlord depending on who is liable. The Income Management Team will make use of landlord ‘blameless tenant’ recovery in cases where the debt is a landlord overpayment and that landlord has other tenants receiving Housing Benefit. The landlord will be notified that we are to recover the overpayment from the claimant and vice versa.

Debt recovery process

  • Invoice issued by the Benefits Team
  • Reminder after 28 days
  • Final reminder after 14 days. Threat of court action
  • Pre-legal letter after 14 days
  • Attachment of earnings
  • Collection agent all over £50
  • Money claim to obtain a CCJ at County Court
  • Instruct High Court Bailiffs

Alternative debt recovery process

  • Invoice issued by the Benefits Team
  • Reminder after 28 days
  • Final reminder after 14 days. Threat of court action
  • Pre-legal letter after 14 days
  • Nudge text, email, contact

9. Enforcement

9.1 The Council will use all means at its disposal to ensure that any debts owed are recovered following any relevant statutory or civil process to enforce payment.

9.2 When initiating recovery action the officer must also consider whether the debtor is vulnerable and how any action would impact on them.

9.3 The following enforcement options will be considered by Council Officers (as well as other options specific to an individual case):

10. Enforcement Agents

10.1 All Enforcement Agents are regulated and have to act in prescribed ways to our customers. They are all fully trained on how to identify vulnerable customers and wear body cameras so all customer contacts are recorded and can be viewed back if required.

10.2 There is a clearly defined stage process and Enforcement Agents can only charge fees for each stage when certain trigger actions have been completed.

  • Stage 1- Compliance stage £75.00
  • Stage 2 – Enforcement Stage £235.00 + 7.5% on the original debt over £1,500
  • Stage 3 – Sale Stage £110.00 + 7.5% on the original debt over £1,500

11.0 Attachment of earnings, fees or benefits

11.1 Used where the debtor is employed or in receipt of other regular income where payments can be taken directly from this income. Deductions are made at a rate determined by legislation.

12. Bankruptcy Proceedings/Liquidation

12.1 Used when the debtor is a property owner and it is thought that there will be sufficient equity within the property to support full or partial repayment of the debt.

12.2 Cases considered suitable for bankruptcy are selected from cases that have been returned from the bailiff, either unable to gain entry or unable to access or returned no goods.

12.3 The following factors must be considered:

  • The level of equity available in the liable property and any other associated properties where the debtor has a financial interest must cover the outstanding debt and associated costs
  • Whether the property is up for sale and therefore a charging order would be more appropriate

13. Charging Orders on property

13.1 Used where the debtor owns a property, the Council is able to recover debt when the property is sold in the future. The Council may consider this action where the debtor is on a low income and or is classed as vulnerable or elderly.

14.0 Committal Proceedings

14.1 The law allows Councils to apply to the Magistrates Court to have a person sent to prison where there is culpable neglect or wilful refusal to pay debt.

14.2 This will be used when bankruptcy or charging orders are not appropriate. It is not generally accepted by the local magistrates’ court as appropriate action, but can be used when other remedies have been exhausted.

15.0 Money Claim

15.1 This is an efficient and inexpensive way for the Council to commence the County Court Judgement (CCJ) process via the County Court. Customers are contacted in regard to any debt by The County Court and given the option to pay in full, set up an arrangement for payment or dispute the debt.

15.2 If the judgement is for more than £600 the Council may be able to ask a High Court Enforcement Officer to try to collect the money or remove goods to sell at auction. A warrant is required for this action.

16.0 Vulnerable customers and those who are in financial difficulty

16.1 The Council is committed to support and assist our vulnerable customers. The Income and Corporate Debt Team work closely with the Customer Support Team and external partners to offer the best solution and advice possible for the vulnerable customer and the Council.

16.2 Extenuating circumstances will be taken into account when considering recovery action in order to protect the vulnerable and avoid transference of a problem elsewhere.

Considerations may include:

  • whether there are very young or elderly people in the household
  • chronic or terminal illness
  • recent bereavement of spouse of member of household
  • potential homelessness
  • the ability of the individual or household to make a payment
  • is an Exceptional Hardship Payment (EHP) or Discretionary Housing Payment (DHP) appropriate
  • for business debts considerations may include:
  • potential loss of employment for employees of the business
  • loss of key facilities for the local community
  • a payment option is the only choice because the business has no assets
  • consideration to any relief that may be appropriate

16.3 Where it has been identified that a customer is suffering from financial difficulties or other extenuating circumstances the Council is committed to providing advice and support as well as a variety of payment options including:

  • holding enforcement action once a customer makes contact to inform of a difficulty in making payment
  • voluntary payment solutions considered in preference to statutory or civil remedies as a first stage
  • past history of payments should be considered when making a decision to proceed with enforcement action
  • where a payment solution is agreed this should be confirmed in writing by the Council including any action that will be taken should the agreed payments not be made
  • payment solutions should be made with an agreed up-front payment from the debtor whenever possible
  • where a payment solution cannot be agreed, the debtor will be advised of the reasons why and that the recovery process will continue should an alternative arrangement not be made

17.0 Tracing and Searches

17.1 As part of the recovery process as number of traces and searches can be carried out to try and establish further information on a debtor. This is particularly useful when we have no forwarding address for someone who has moved home before settling a debt.

17.2 Locating Council Tax Absconders (LOCTA) is a local government tracing tool that provides a suite of information including, forwarding address, DWP information, credit reports and telephone numbers.

17.3 If a LOCTA search is unsuccessful the Council may use a Credit Referencing Agency to trace an individual. The Data Protection Act section 29 allows Local Authorities to credit check and search individuals in regard to the collection of Tax.

17.4 The use of internet searches and Social Media to access information in the public domain is also very useful, particularly in establishing employment details for attachment of earnings.

17.5 We can also use a Customer Information System (CIS) check that allows certain authorised officers to search DWP database. This information can only be used for the recovery of Housing Benefit Overpayments.

17.6 If necessary the Council may ask a Revenues Inspector to carry out a visit to establish the status of a property.

18.0 Bad debts

18.1 For the purpose of this policy a bad debt is classified as money due:

  • when there is little or no likelihood of recovery after all methods have been exhausted
  • where it is uneconomical or inefficient to recover the sum due
  • but the debt is too old (aged) to continue recovery
  • where the Council does not wish to pursue recovery because the circumstances of a case would attract well-founded adverse publicity or public reaction, or the concept of natural justice would be compromised

18.2 Where it is considered that a debt is a bad debt the Council will ensure that it is written off promptly to preserve and maintain the principle of accurate and up to date information. Decisions will be made based on the circumstances that exist at the time and any unusual circumstances should be referred to the Head of Service or Portfolio Holder.

Debt value and how it is processed
Debt value Process Authorised person
Up to £25 Write off on the system with screen notes using write off code Corporate Debt/Revenues Officer/Housing Benefit Officer
£25 to £100 As above. Income and Corporate Debt Manager to carry out spot checks and record for audit purposes. Corporate Debt/Revenues Officer. Corporate Debt Manager/Housing Benefit Manager
£100 to £5,000 Detailed system checks/searches carried out. If unsuccessful and investigation form is complete and signed. Investigation forms batched and front schedule to be signed. Corporate Debt Manager/Housing Benefit Manager. S151 Officer
Over £5,000 A Portfolio Holder report must be complete with details of individual write-offs Portfolio Holder

18.3 The cumulative total of debts written off will be monitored by the Income and Corporate Debt Manager to ensure that the incidence of bad debt remains consistent with the Councils estimates and projections.

19.0 Complaints and errors

19.1 If an error or mistake is made in the process of recovering debt the account will be reviewed and appropriate action taken.

19.2 If a customer is unhappy with the service provided or disagrees with the decisions made they are able to complain through the Councils standard complaints procedure. Details of this can be found at Help Us Get it Right.

19.3 During the process of enforcing payment of outstanding debts it is possible that evidence or facts emerge after enforcement proceedings have been taken or have been completed.

19.4 In these cases the Council will take appropriate action to remedy the situation as far as possible:

  • Proceedings will be stopped immediately
  • The debtors account will be noted to reflect the revised situation
  • Where appropriate the Court involved will be advised

19.5 Although the Council will make every effort to resolve a misrepresentation of the true situation, some issues can only be resolved by reference to the Courts.

Appendix 1


Standard Enforcement Actions for Mortgages and Shared Ownership Scheme

Individual accounts are monitored on a regular basis to ensure that regular monthly payments are received, and reminders sent. Where all or part of the debt is paid by the Pensions Service or the Benefits Division, the receipt of these sums will also be monitored. Whilst standard reminders are available, a more personal approach will often be required.

If the debtor fails to maintain regular payments the Corporate Debt Team will attempt to discuss options. Should this not prove possible, or if arrangements are not adhered to, then the following action will be taken:

Mortgages

Legal Services will be approached and given sufficient information to allow for the preparation of a possession order to be requested from the District Judge. Whilst Court papers are being prepared, Legal Services will warn the debtor of the implications of non-payment.

If a possession order is obtained, the Income Management Team will monitor the arrangement made. Should payment cease, a Portfolio Holder decision will be required if it becomes necessary to implement the order.

Shared ownership cases

Where a mortgage is held on the property, then the lender will be advised that rent is not being paid and that forfeiture proceedings are being considered. If the lender will not make payment on behalf of the borrower, or if there is no lender, the Council will decide whether to pursue forfeiture or to attempt to obtain a money judgment for the County Court.

Appendix 2


Standard Enforcement Actions for Penalty Charge Notices (North Essex Parking Partnership)

This debt is collected directly by the North Essex Parking Partnership and not Customer Services.

Parking enforcement is carried out in accordance with the provisions and procedures laid out in the Traffic Management Act 2004. A parking penalty is not a debt until the motorist has exhausted all avenues of appeal.

  1. Penalty Charge Notice issued.
  2. DVLA enquiry made if no correspondence received or payment received within 31 days.
  3. Notice to Owner sent if full payment is not received within 31 days of issue.
  4. Charge Certificate sent and charge increased by 50% of full payment, or representation against Notice to Owner, if not received within 31 days.
  5. Debt registered at County Court and fees added if full payment is not received within 17 days of Charge Certificate being sent.
  6. Order for Recovery sent.
  7. Apply for a Warrant of Execution and instruct Enforcement Agents (bailiffs) if full payment or Witness Statement is not received within 21 days of Notice of Debt Registration being sent. A Warrant of Execution has a lifespan of 12 months only and cannot be reissued thereafter. If the Council has been unsuccessful in recovering the penalty charge by means of a Warrant within 12 months and wishes to pursue, the Council must ask the Traffic Enforcement Centre (Northampton County Court) for authorisation to prepare another Warrant. Warrants that have been returned from the Bailiff after a period of 6 months because the debtor could not be traced or there are no funds or goods to seize can be sent to other Bailiff companies for collection.    
  8. If warrants remain unpaid, the council is now able to recover debt using a different process where a valid warrant is not required.
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