Recovering unpaid tax

July 5th, 2018 by James Goudie KC

Powys County Council v Hurst (2018) EWHC 1684 (Admin) was an appeal by way of case stated to a Divisional Court (Hickinbottom and Singh LJJ) against the decision of a District Judge (“DJ”) that the Council was required to consider proceeding under the Attachment of Earnings Act 1971 (“the 1971 Act”) as an alternative method of recovering unpaid council tax before applying to commit the Respondent to prison for non-payment of that tax. The DJ reached his decision on the basis that it was open to the Council to seek an attachment of earnings order in the County Court in respect of the Respondent’s pension. The main issue in the appeal was whether that course was open to a billing authority such as the Council as a matter of law. The Divisional Court held that it was not and allowed the appeal.Schedule 4 to the Local Government Finance Act 1992 (“the 1992 Act”) contains provisions about the recovery of council tax and confers a power on the Secretary of State and Welsh Ministers to make Regulations. The relevant Regulations are the Council Tax (Administration and Enforcement) Regulations 1992, S.I. 1992/613 (“the 1992 Regulations”). They enable a billing authority such as the Council to seek a Liability Order from the Magistrates’ Court and contain a power for the Court to commit to prison if other options to secure payment are unavailing.

The central question which arose in the appeal was whether the scheme for enforcement of Liability Orders under the 1992 Regulations is “self-contained and exclusive” and excludes an attachment of earnings order under the 1971 Act.  The Divisional Court held that the legislative scheme is intended to exclude recourse to methods of enforcement outside those set out in the 1992 Regulations.  Those methods do not include attachment of earnings (or pensions).

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