Council chasing NDR after going BR

[gallygaskins]

Hi all

 

I have been in a long and heated battle with the council over numerous things including council tax and non-domestic rates. The whole story so far is in this thread on the bailiffs forum http://www.consumeractiongroup.co.uk/forum/bailiffs-sheriff-officers/217858-aaaaarrrrrrrgggggghhhhhh-why-wont-they.html

 

My problem with them now is that after I went BR at the end of May 2009 and placing both the CT and NDR in my bankruptcy the council have instructed the bailiffs to come after me for £2500.

 

I have taken legal advice about this and the solicitor I spoke to said that she felt as it formed part of my bankruptcy then they shouldn't be coming after me, however she did suggest I spoke to my official receiver about it. Unfortunately, I wrote to my Examiner asking her for the OR's details so that I could speak to him direct and she basically fobbed me off and told me that although it was in my banruptcy the council could still come after me.

 

Now I'm angry because a) I assumed that when you went bankrupt and a judge signed your petition that was it; and b) I'm a little annoyed that the examiner never pointed out this fact to me. What is the point of going bankrupt when the council can still act like this?

 

Another problem is that once the bailiffs add on their charges they will expect the amount to be paid over 6 months. And as I am only now working p/t, the family income isn't that great and the business folded in January 2009 owing over £65k and I got out of it with nothing, i.e. we lost everything in it, we just won't be able to pay it off in 6 years let alone 6 months. The worrying thing is I don't know where I stand with this and I believe the only reason they are doing this is because my husband and I stood up to them against an unfair and unlawful van charge fee of £450 from the bailiffs which we now have our MP fighting our corner on.

 

Can anyone suggest anything? Obviously I don't want to have to be made to pay this. I don't see why I should as it is a business debt and as the business hasn't been trading since end Jan and I have been declared BR since then the business debts should all be written off. It's also funny that if the council always had the intention to demand this money why didn't they come after me earlier? Why wait until the end of October to begin enforcement? Their actions don't add up.

[reallymadwoman]

Speak to someone at the official receiver's office and ask theire opinion on whether the council can do this. The number will be in your phone book.

[gallygaskins]

Speak to someone at the official receiver's office and ask theire opinion on whether the council can do this.

 

I already have, twice, to the examiner. She is the this one that has told me that 'the council has the right to distrain against your goods for the payment of council tax and non-domestic rates'.

 

The person I really want to speak to is the OR but I don't seem to be able to get close to him.

[reallymadwoman]

How about phoning the OR at a different court with a hypothetical question? The one at Bournemouth is supposed to be very helpful.

This is from the insolvency service website, and seems to be saying CT is included in bankruptcy

'Any amount due and unpaid under the instalment agreement prior to the insolvency order is an unsecured debt in the proceedings [Note 6]. If the bankrupt's council tax is up to date under the instalment agreement at the date of the bankruptcy order, no amount is provable in the bankruptcy as it relates to future occupation of the dwelling. Where a liability order has been obtained by the council, prior to the bankruptcy order being made the whole debt as notified within the liability order becomes due and it is therefore a provable debt as defined in paragraph 40.12.'

[phat256]

I echoed the post of really madwoman .. i had council tax arrear which were included into the BR . council tax arrear aredefinately included up to the date of the BR order.

 

what happen is that the council usually close your account write offf the arrear adn start sa new account from the date of your BR order.

 

but th also if you had a liabilyt order befoer your BR order then the whoel year is included into the BR but you will have to argue a lot with the council.

 

but i had to argue a lot with the council before they acted upon it.

[gallygaskins]

That's helpful to know, we had a liability order for both the council tax and the non-domestic rates. Does anyone know if the NDR are dealt with in the same manner. If it is the case then it should've been written off.

 

There is a member of the family that works for the insolvency service in another area so I'm going to have a word with her. Plus I think I am going to try and tackle the problem with my office by trying to find my OR and getting in contact directly. I'm going to give the examiner short shrift for not giving me the information that I requested.

[toddle2u]

Was the NDR for yourself as a sole trader or a Ltd Company?

[debtinfo]

Hi, the answer to whether they can distrain is yes and no, The debt is a provable debt in the bankruptcy order. However as the court has said that they can distrain they can do so. The OR will take any valuable assets and exempt any assets that are considered to be for your basic domestic need. They can not take the OR's goods ans they also can not take things that are needed for basic domestic need. The problem comes because they have different opinions as to what is a basic domestic need so often there is a gap in the middle where the distraining happens.

 

As regards to the OR, it is not there job to advise you which is why they are trying to say nothing as there is nothing they can really do. it is down to the court

[debtinfo]

Ths is the relevent part of the OR's technical manual

 

9.11 Local authorities

(November 2008)

Each local authority collects council tax, which is payable in respect of dwellings in its area, or non-domestic (i.e. business) rates, which are payable in respect of business premises. Local authorities are able to distrain for unpaid council taxes and non-domestic rates. Their right to distrain is contained in:

a. the Local Government Finance Act 1988, schedule 4, paragraph 7;

b. the Local Government Finance Act 1992, schedule 4, paragraph 7;

c. the Non-Domestic Rating (Local Lists) (Collection and Enforcement) Regulations 1989, regulation 14;

d. and the Council Tax (Administration and Enforcement) Regulations 1992, regulation 45.

Distress may only be levied under each of these statutory instruments once a liability order has been made by the magistrates’ court.

Where the local authority has obtained a liability order, prior to the insolvency order being made, the whole debt as notified within the liability order becomes due and it is therefore a provable debt in the insolvency (see paragraphs 40.12 and 40.101).

A liability order may only be made after the date of the insolvency order, with leave of the court, in accordance with sections 130 or 285 of the Insolvency Act 1986.

 

9.11A Local authorities – timing of distress in winding up proceedings

(November 2008)

The local authority has the right to distrain, for unpaid council tax and non-domestic rates, against the property of a company, until the commencement of winding up proceedings. Section 128 of the Insolvency Act 1986 renders void any attachment, including distress, against the estate or effects of a company after the commencement of compulsory winding up proceedings (see paragraph 9.36).

Where the liquidator continues the business of the company at existing premises, or if the company owns or leases premises, a liability for council tax or business rates may arise after the winding-up order, even if the property is unoccupied (see paragraph 3.60). Any liability arising after the winding-up order has been made, as a result of any action or inaction of the liquidator, is treatable as a cost in the liquidation and is payable in order as such (see Chapter 36, Part 4). The levying of distress for council tax or rates may take place only against the goods of the company and not against the liquidator personally, therefore section 128 of the Insolvency Act 1986 prevents distress for any post insolvency liability incurred.

Where the local authority has distrained upon the company’s assets in the period of three months ending with the date of the winding up order, the goods or their proceeds of sale are charged for the benefit of preferential creditors (see paragraph 9.33).

 

9.11B Local authorities – timing of distress in bankruptcy proceedings

(November 2008)

The right of local authorities to distrain for unpaid council tax and non-domestic rates (pre and post bankruptcy order) is exercisable at any time, including after the bankruptcy order and even against property comprised in the bankrupt's estate, in accordance with section 347(8) and (9) of the Insolvency Act 1986. The only exceptions being where an application for an interim order, under section 253 of the Insolvency Act 1986 is pending, whereby the court may forbid the levying of distress under section 254(1)(b) of the Insolvency Act 1986. Additionally, where an interim order has been made under section 252 of the Insolvency Act 1986, leave of court must be obtained before distress is levied (see paragraph 9.37).

Any liability for council tax or rates arising after the bankruptcy order, is not provable in the bankruptcy proceedings and the local authority can use all of the collection methods available to it in the recovery of such a debt, Where the local authority has distrained upon the bankrupt’s assets in the period of three months ending with the date of the bankruptcy order, the goods or their proceeds of sale are charged for the benefit of preferential creditors (see paragraph 9.33).

9.11C Local authorities – council tax – distress process and restrictions

(November 2008)

The local authority must give 14 days notice of the bailiff attending. The bailiff can only seize the goods of the person(s) assessed to pay council tax, including property vested in the trustee. Goods which are situated in a dwelling house and are reasonably required for the domestic needs of the debtor and his family cannot be seized when distraining for unpaid council tax. Rented or hired goods and utility fittings are also exempt from distraint for unpaid council tax.

The bankrupt can refuse access to the property and a bailiff distraining for unpaid council tax cannot use force to gain initial entry to a property. However, walking through an unlocked door or climbing in through a window without causing damage is considered to be a peaceful means of entry. A bailiff who has previously been allowed entry to the premises can force entry, to recover goods which have previously been seized by walking possession (see paragraph 9.17).

If goods are removed, or impounded, they must be held for a minimum of 5 days before sale to allow the bankrupt to settle the debt. If a levy of distress is completed by the sale of property but does not recover sufficient funds to discharge the debt under the liability order the local authority, before the bankrupt’s discharge, can levy a second or subsequent distress. A person aggrieved by the levy of, or an attempt to levy, a distress may appeal to a magistrates' court.

 

9.11D Local authorities – relationship between remedies

(November 2008)

The debt due under a liability order for council tax or non-domestic rates is a provable debt in insolvency proceedings and can form the basis of a petition for a winding-up order or bankruptcy order; see regulations 18 of the Non-Domestic Rating (Local Lists) (Collection and Enforcement) Regulations 1989 or 49 of the Council Tax (Administration and Enforcement) Regulations 1992 respectively.

Other enforcement measures available to the local authority include:

• Collection from ongoing benefit payments.
  
• Obtaining an attachment of earnings (see paragraph 9.125).
  
• Levying distress as detailed above.
  
• Obtaining a charging order (see Part 4).
  
• Commitment to prison.
  

Each remedy may be employed against a debtor under a liability order in turn (subject to the exceptions detailed below), however, whilst steps by way of one method are being employed another may not also be instigated simultaneously. Collection from benefit, attachment of earnings and distress may be resorted to more than once, and in any order or alternately (or both). Sums collected are applied initially to the costs and charges of the enforcement action prior to being applied to the discharge of the debt subject to the liability order.

[Notes: Non-Domestic Rating (Local Lists) (Collection and Enforcement) Regulations 1989, regulation 19 and the Council Tax (Administration and Enforcement) Regulations 1992 regulation 52]

Where the insolvency petition is presented by a party other than the local authority, the position of the local authority will depend upon the stage reached in their current enforcement measures prior to the insolvency order being made. That is with the exception in bankruptcy regarding the right to distrain which survives until discharge. The remaining enforcement measures require court orders and as such will fall within the general restrictions applicable to creditors under sections 130 or 285 of the Insolvency Act 1986. The right to collect from ongoing benefit payments or wages will continue where an attachment order is in place. That order may be varied or discharged by the court.

Where a local authority obtains a committal warrant against an individual following distraint none of the other enforcement methods detailed above may subsequently be taken to recover the sums due under the liability order. The bankruptcy court has jurisdiction to stay any committal proceedings ongoing at the date of the bankruptcy order (Re Smith (A Bankrupt) [1989] 3 All ER 897).

9.11E Local authorities – council tax – joint liability

(November 2008)

The Council Tax (Administration and Enforcement) Regulations 1992 regulation 54 defines joint taxpayers as two or more individuals who are jointly and severally liable to pay an amount in respect of council tax. A liability order may be made against one or more joint taxpayers in respect of an amount for which they are jointly and severally liable. Where a liability order has been made against two or more joint taxpayers, collection from ongoing benefit, an attachment of earnings order, distress, or a charging order may be made against one of them, or different such orders may be made against more than one. However, the local authority may not take enforcement action in respect of one of the joint taxpayers while steps by way of that or another enforcement method are being taken in respect of another of them. There is no requirement to target all taxpayers for collection equally. Where a committal warrant is issued against one of the joint taxpayers no further steps, may be taken against any of them by way of collection from ongoing benefit, attachment of earnings, distress, bankruptcy or charging orders

[gallygaskins]

I was a sole trader.

 

From what I have read then, as a liability order was issued before I went bankrupt this debt is provable and therefore should have been written off.

 

And in fact my mum has a statement with both NDR and CT from Shropshire saying the debts were at nil balance on the 22/07/09. Her name, along with my own, was only present on the lease, she didn't have any control over the business. I went BR on 29th May 2009 and she was made insolvent by the landlords on 19th August 2009.

[debtinfo]

But 9.11B states

 

The right of local authorities to distrain for unpaid council tax and non-domestic rates (pre and post bankruptcy order) is exercisable at any time, including after the bankruptcy order and even against property comprised in the bankrupt's estate, in accordance with section 347( and (9) of the Insolvency Act 1986

[gallygaskins]

This is obviously a matter of interpretation then and it seems I should go and speak with my solicitor and MP about this. The point is that not only a judge has determined I am unable to pay my debts i.e. by signing the petition in the first place, and the OR has assesed my position and decided that I have no assets to sell in order to pay off my debts, therefore I have nothing for the council to take. Why are they even bothering? Because they are still smarting from the fact that we have stood up to them and they think they can hit me where it hurts. And as they alread wrote to my mum in August and told her then that the debt was written off they can't have their cake and eat it! I'm not giving this up without a fight.

[reallymadwoman]

If you don't have anything for them to take they can make as much fuss as they like and you can just sit back and let them.

Absolutely get your MP involved, and have you tried the local press? A story in the paper might lead to the council suddenly having a change of heart over pursuing this.

[gallygaskins]

I have certainly threatened them with the press before on the matter of their approval of the bailiffs charging unreasonable and unlawful fees on my husbands council tax account. So I have no qualms about going to the papers about it, anyone have any suggestions on which ones I should approach? Just local or national?

[reallymadwoman]

Try the local ones first - more embarrassing to the council as they know all the readers are the people who voted for them.