SDAS consultancy case study
A local authority is chasing my client for council tax arrears from ten years ago. Is the authority allowed to enforce the debt after so long? What are the time limits to take action, if any?
Time limit to enforce council tax debts
The limitation period for council tax is six years. It is set by regulation 34 Council Tax (Administration and Enforcement) Regulations 1992 (the regulations).
The regulations state that a local authority cannot apply for a liability order more than six years after the day the debt fell due.
Restarting the limitation period by acknowledging the debt
The time limit for debts under a contract can be restarted by the debtor or their adviser writing to the creditor. Council tax regulations do not contain any acknowledgment provisions.
That means you or your client can write to the local authority to complain or ask for information without restarting the limitation period.
When the council tax debt falls due
The council tax debt falls due on the day the local authority serves the taxpayer with a demand for payment (or sends a council tax bill, in other words). The High Court confirmed this in Regentford v Thanet District Council [2004] EWHC 246.
Regulation 19(1) requires the authority to serve a council tax bill on the taxpayer 'on or as soon as practicable' after setting council tax rates for the year. Rates are usually set in March, shortly before the new financial year.
Delay in issuing the bill
A local authority that does not serve the bill promptly delays the start of the six-year limitation period. It does not mean the bill is invalid, but the taxpayer is not obliged to pay until they have received a bill.
Taxpayers who have suffered prejudice due to a long delay can complain to the local authority because of its maladministration.
When a delay could be maladministration
For the complaint to be successful, your client must show the prejudice was serious, not just inconvenient. Serious prejudice might include financial loss. For example, being unable to claim council tax reductions or discounts, or losing the right to pay by instalments.
The longer the delay, the more likely your client is to have been prejudiced.
Your client can escalate their complaint to the Local Government and Social Care Ombudsman if they are unhappy with the local authority's response. That includes if the authority does not respond within 12 weeks.
Ombudsman complaint about delays
A taxpayer complained to the Ombudsman about their local authority, London Borough of Redditch. Redditch issued demand notices for council tax due from 2010-2013 in 2019 [LGSCO DRN 18 010 626 04 Mar 2019].
The Ombudsman decided that the local authority was at fault. The authority cancelled the debt.
Six-year period to apply for a liability order
A liability order is an order of the magistrates' court. The authority applies for a liability order if it has issued a demand for council tax but the debt remains unpaid.
Once the authority has obtained a liability order from the magistrates' court, it has unlimited time to enforce the debt.
Liability order obtained outside six years
Your client can complain to the local authority about its application for a liability order, and ask it to quash the order. Point out that regulation 34 and the Regentford judgment mean the authority was not entitled to a liability order.
Your client can escalate their complaint to the Ombudsman if the authority does not quash the liability order when asked.
Apply to the magistrates' court to quash the order
Section 82 Local Government Act 2003 allows your client to apply to the magistrates' court if the local authority refuses to quash the liability order.
The bar for quashing a liability order is very high. The magistrate must be satisfied a three point test has been met:
There must be a genuine and arguable dispute about the liability to pay
There must have been substantial procedural error, defect or mishap for the liability order to have been made
The application to set aside was made promptly after the defendant had notice of its existence
This was confirmed in R (on the application of Newham LBC) v Stratford Magistrates’ Court [2008] All ER (D) 17.
Promptness normally requires action within days or at most a few weeks. This was confirmed in R (Brighton and Hove City Council v Brighton & Hove Justices and Hamdan [2004] EWHC 1800 Admin.
Your client will need specialist legal advice before applying to the magistrates' court.
Delays in enforcing the liability order
Although there are no legal time limits to enforce a liability order, your client could complain to the Ombudsman about unjust delays. A long delay could constitute maladministration or abuse of process.
The Court of Appeal allowed judicial review proceedings against a local authority that did not enforce liability orders for ten years in Ahijah-Sterling v Lambeth LBC [1986] RVR 27. It held that the delay had been unjust to the taxpayer.
In 2022, the Ombudsman upheld a complaint of maladministration against London Borough of Barnet for taking steps to enforce a liability order obtained in 2007 after a 15-year delay [LGSCO DRN 22 006 759 23 Dec 2022].
What information to gather
To advise your client, you'll need to know when the local authority served the bill, and whether it has obtained a liability order within six years of the council tax bill being served.
A subject access request to the local authority will show when the council tax bill was served, or if a liability order has been obtained. The request is free of charge. The authority must respond within a calendar month.
The Information Commissioner's website has more information about subject access requests.
Financial hardship
Once you have all the information you need, you might find your client cannot challenge their council tax debt on limitation or delay.
If, after budgeting and debt advice, your client is unable to pay their council tax, they could ask the authority to write it off. Section 13A Local Government Finance Act 1992 gives the local authority a discretionary power to reduce or waive the bill.
In SC and CW v East Ridings of Yorkshire, a tribunal held it does not matter how long ago the council tax liability arose.
The valuation tribunal has stated that the taxpayer must demonstrate financial hardship for a request to succeed. They must include a financial statement with the application. If the budget shows even a small surplus the application is likely to be declined.
Find a template letter in Lorraine Charlton's article for Citizens Advice on Medium, Discretionary council tax reduction - How to guide.
Further resources
Read our article Council tax liability orders - the price of non-payment in Shelter's news and updates.