Part 1(Open to the public)
ITEM NO.11
REPORT OF THE LEAD MEMBER FOR STRATEGIC DIRECTOR OF CUSTOMER
AND SUPPORT SERVICES
TO THE LEAD MEMBER FOR CUSTOMER AND SUPPORT SERVICES
ON Thursday, 22 March, 2007
TITLE : COUNCIL TAX - Write-off Report
RECOMMENDATIONS :
1. Members are requested to approve the write-off of the irrecoverable debts
mentioned in Appendix 1 to the report
2. Members are requested to approve the write-on of the credits mentioned in
Appendix 2 to the report.
EXECUTIVE SUMMARY :
The report provides details of the level of council tax arrears within the city and
proposes action be taken to write-off irrecoverable liabilities of £1m together with the
write-on of credits for £539k
BACKGROUND DOCUMENTS :
(Available for public inspection)
Council Tax Write-off Strategy 2007
ASSESSMENT OF RISK:
The write-off of irrecoverable debts is an essential part of the administration of
accounts
SOURCE OF FUNDING:
the bad debt provision
COMMENTS OF THE STRATEGIC DIRECTOR OF CUSTOMER AND SUPPORT
SERVICES (or his representative):
1. LEGAL IMPLICATIONS
Provided by :None
2. FINANCIAL IMPLICATIONS
the bad debt provision has been confirmed
Provided by :The level of
3. ICT STEERING GROUP IMPLICATIONS
Provided by:N/A
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PROPERTY (if applicable):
N/A
HUMAN RESOURCES (if applicable):
N/A
CONTACT OFFICER :
Stephen Fryer
KEY DECISION:
The write-off of irrecoverable debts is provided for in the Forward Plan
WARD(S) TO WHICH REPORT RELATE(S):
ALL WARDS
KEY COUNCIL POLICIES:
Best Value; Performance Management;
DETAILS (Continued Overleaf)
The write-off of irrecoverable debts may affect properties in any Ward
Report of The Strategic Director of Customer and Support Services
Re: Council Tax Write-off arrangements
1. Background
1.1 In recent years, significant improvements have been made in ensuring
irrecoverable council tax liabilities are written off in a timely manner to enable
Salford Direct’s recovery resources to concentrate on tackling live debt collection
issues. Members will recall that the District Auditor has recommended the use of
timely write-offs of irrecoverable debts.
1.2 Below are details of the level of outstanding debts as at 31st March 2006.
Year
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
Amount outstanding
at 31st March 2006
£
5,912.49
11,531.93
12,194.67
12,941.22
39,100.90
24,823.51
654,051.29
1,148,539.70
2
2001/02
2002/03
2003/04
2004/05
2005/06
Total
1,179,285.82
1,571,529.53
2,301,406.55
4,333,216.26
10,162,586.30
21,457,120.17
2. Actions required
2.1 At Appendix 1, Members will find details of irrecoverable council tax liabilities to
the value of £996k that relate to balances on accounts for the year 2000/1. The age
of these debts make them increasingly difficult to collect and this uses up significant
recovery resources. The write-off of these debts will allow greater focus of recovery
resources on more recent year’s debts and will help to improve collection rates on
those later years. Also, in Appendix 1, are details of council tax liabilities to the value
of £10.5k, where each amount is less than £100.00, which makes them
uneconomical to recover.
2.2 The write-off of these debts has been provided for in terms of bad debt provision
and if agreed would be a major step towards quickly removing irrecoverable debts
from the accounts.
2.3 In addition to writing off irrecoverable debts, an essential part of managing
accounts involves writing on unidentifiable credits or those credits where the
whereabouts of the chargepayer is unknown. Many of the existing credits have been
on our accounts for some time and it is now appropriate to write these on to the
accounts and so clear them from the Council Tax records.
At Appendix 2, Members will find details of these credits which amount to £539k
3. Recommendation
Members are requested to approve the write-off of irrecoverable council tax liabilities
amounting to £1,007,399.21highlighted in Appendix 1 and to approve the write-on of
credits amounting to £539,440.01 highlighted in Appendix 2.
Alan Westwood
Strategic Director of Customer and Support Services
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Write-off Strategy - Council Tax 2007
Objectives:
The objective of this policy is to ensure that all reasonable steps are taken to recover
any outstanding Council Tax before it is considered for write-off.
An outstanding debt can be considered for write-off if it falls into any of the categories
listed below
 Absconded
 Deceased
 Bankruptcy
 Liquidation
 Ceased to trade
 Receivership & Administration
 Statute barred
 Individual Voluntary arrangement and Company Voluntary arrangements
 Remitted by the Magistrates Court
Method of recovering Council Tax
A bill is issued at the start of each financial year and in most cases the chargepayer
would elect to pay by monthly instalments although other options are available i.e.
weekly, fortnightly, half yearly or in a lump sum.
Reminder notices are generated for those chargepayers who fall behind with their
instalments and these show the amounts they need to pay to bring their payments up
to date. If they fail to bring their payments up to date within the timescale allowed the
full amount becomes due and if this is not paid, a summons would be issued in the
Magistrates Court for any balance outstanding.
If the chargepayer brings their payments up to date but defaults again a second
reminder will be issued. Again failure to bring payments up to date will result in a
summons being issued.
Following the issue of a summons if the chargepayer does not pay in full before the
court hearing date the authority will make an application for a Liability Order together
with costs.
Once the local authority has obtained a Liability Order this gives them various options
to recover the debt
 Arrangements – can be made with chargepayers for payments to be made
to clear the outstanding debt.
 Bailiff Action - The local authority can forward the details of the debt to one
of three external bailiff companies for collection. The chargepayer would be
responsible for any charges made by the bailiffs in respect of the debt.
 Attachment of earnings – where the chargepayers employment details are
known.
 Attachment of benefits – where the chargepayer continues to be in receipt of
state benefits.
 A charge on property – where the chargepayer owns the property a charge
can be registered on it that will ensure payment is made when the property
is sold.
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

Bankruptcy - This involves an application to the County Court for a petition to
make the chargepayer bankrupt.
Liquidation - If the chargepayer is a limited or public limited company the
authority can commence proceedings to have the company wound-up
(leading to Liquidation). The necessary action for this would be taken in the
County Court
Committal to Prison - If an account has been returned by the bailiffs
unexecuted “insufficient goods on which to distrain” and payment cannot be
obtained by one of the other remedies mentioned above, an application can
be made for the chargepayer to be considered for committal to prison. The
chargepayer will be required to attend the Magistrates Court to explain why
they should not be committed to prison in default of the outstanding balance.
At the hearing the Magistrates will conduct an enquiry into the means of
debtor which could result in any of the following: a) Immediate Committal
b) Suspended Committal coupled with an order for payment
c) Remit either part or all of the debt
The debtor may have contacted the authority prior to the hearing
and made an arrangement to pay. These cases will be withdrawn
by the authority but reinstated if the debtor fails to keep to the
arrangement.
If the debtor fails to attend at the hearing the authority will
make application for warrants of arrest to be issued by the court
either with or without bail.
Mandatory Write-offs
Certain circumstances exist where it would be normal and reasonable to
automatically consider a debt for write off irrespective of the size of the debt.
1 Bankruptcy
Upon notification from the trustee in bankruptcy or official receiver the local authority
will complete a proof of debt covering all outstanding charges up to the date of the
bankruptcy. Once a claim has been submitted the account(s) should be coded
appropriately and submitted for write-off. In the case were more than one person is
liable for the debt action will be taken against the other liable person for any monies
due.
This type of debt ranks as an unsecured debt and it is unlikely that any payment will
be forthcoming from the trustee in bankruptcy. If full or part payment is received any
amounts already written off with be written back on to the accounts.
2 Individual Voluntary Arrangement
This is an alternative course of action available to an individual wishing to avoid the
restrictions made by a bankruptcy order. It involves the debtor making an offer to all
creditors that is less than the full amount of the debt outstanding to be repaid over a
period of time in full and final settlement. If creditors holding at least 75% of the total
debts agree to the offer, the Arrangement is approved and this affects all creditors
notified prior to its approval. An insolvency practitioner then manages the
arrangement until the payments agreed have been made. There is no discretion to
be included in such an order once it has been agreed. If the debtor fails to keep to
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the agreement made in the order any of his creditors can subsequently petition for
their bankruptcy.
3 Liquidation
Upon notification from the official receiver or agent acting on behalf of the official
receiver the authority should file with the official receiver or agent a proof of debt form
of all monies outstanding to the date of the liquidation. Once a claim has been
submitted the account(s) should be appropriately coded and submitted for write off.
This type of debt ranks as an unsecured debt and therefore it is unlikely that any
payment will be forthcoming from the official receiver or agent. If full or part payment
is received any amounts already written off with be written back on to the accounts.
4 Statute Barred
Certain debts will fall outside of legal jurisdiction either because the debtor may have
left the country or 6 years may have elapsed since the debt was incurred and
recovery action has not already been taken.
Cases of this type are rare but where they do occur legal action cannot be taken to
recover the debt so they will be recommended for write-off.
5 Remitted by the Magistrates
At a committal hearing the Magistrates may remit part or all of the debt if they feel it
would be unreasonable to expect the chargepayer to make payment.
In such a case there is no alternative but to write-off the amount remitted.
Discretionary Write-offs
In addition to the circumstances where the Council is legally prevented from taking
action to pursue the recovery of monies due, there will be instances where recovery
cannot be enforced because either:  the debtor cannot be traced,
 the chargepayer has died & there are no monies in the estate to pay the
outstanding charge
 it is uneconomical to collect the debt, because of its value in comparison with
the cost of recovery action, or
 the chargepayers personal circumstances mean that to make payment would
cause unreasonable hardship.
1 Absconded
These are cases when the debtor has absconded and attempts to trace them have
been unsuccessful. Under such circumstances there is little alternative but to write-off
the debt. This clears the accounts of irrecoverable debts and allows resources to
focus on those debts that can be recovered.
Before a debt can be considered for write-off the following procedures will be carried
out: -
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


Check the Council Tax and Benefits database to see if the person has re
registered at another address within the city.
If the property had been rented, check with any landlord or letting agent for a
forwarding address.
If a Limited Company check Companies House and Equifax for details of the
company i.e. names and addresses of directors and position regarding the
status of the company.
Make two enquiries via LoCTA (if home address of the debtor is known)
allowing at least one month between enquiries (this allows time for LA
databases to brought up to date).
2 Deceased
When a debtor dies leaving outstanding debts but there are no monies available from
the estate, the debts will be treated as irrecoverable and put forward for write off.
In these cases the solicitors acting for executors will be approached for payment
before any recommendation is made to write-off the debt.
3 Uneconomical Amounts
Collecting debt can be an expensive process and in some cases the cost of recovery
action makes pursuit of the debt uneconomical. The level of individual debt written off
in these cases can vary depending on the recovery stage reached in a particular
case.
4 Hardship
Where a customers circumstances are such that to make payment would cause
unreasonable hardship the amount outstanding can be considered for write off. Each
case is considered on its merits and the amounts involved may vary considerably.
Write-off procedure
A report is prepared for Lead Member showing the number and value of the cases.
Once approved each individual case is written off the system using automated
procedures, where available.
If at anytime after a debt has been written off, payment is received in respect of that
debt, then the amount involved will be written back on to the accounts.
Reports to Members
Reports will be submitted to Customer & Support Services Lead Member for approval
on an ad hoc basis.
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Updated 1/3/2007
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Appendix 1
Analysis of cases for Write-off
YEAR /
CATEGORY
2000/1
2001/2
2002/3
TOTALS
IRRECOVERABLE
AMOUNTS
£996,887.44
£996,887.44
UNECONOMICAL
TOTAL
£2,968.19
£7,543.58
£10,511.77
£1,007,399.21
Appendix 2
Analysis of credits for Write-on
YEAR
WRITE ON
1993
1994
1995
1996
1997
1998
1999
TOTAL
£ 30,546.91
£ 47,930.49
£ 64,344.80
£ 73,977.81
£ 93,526.72
£ 93,142.73
£135,970.55
£539,440.01
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