Council Tax

Could Scotland abolish Sheriff Officers?

Could Scotland abolish Sheriff Officers?

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Does Scotland need Sheriff Officers?

I don’t think so.

I think with several legislative changes, the requirement for Sheriff Officers could be removed and the process as to how debts are recovered could be radically reformed.

This I believe would significantly reduce the costs involved for those seeking to recover debts, and for those who owe debt.

Scottish Diligence Statistics

The reason for me believing this has been brought on by the recent release of Scotland’s Diligence Statistics for 2018-19, which cover the types of legal debt recovery procedures that are used by Sheriff Officers.

These statistics bring into sharp focus the issue of how Council Tax debts in Scotland are being collected.

What the statistics show is that almost 88% of all work carried out by Scotland’s equivalent of Bailiffs, Sheriff Officers, is to recover Council Tax debts,  and probably adds close to £30 million onto those debts in the form of Sheriff Officer fees (Unanswered questions over local authority debt statistics – The Herald; 18th December 2019)

The type of work carried out by Sheriff Officers on behalf of Scottish councils includes:

Now this is concerning, as what the statistics also show is that the use of Sheriff Officers to recover debt by non-local authority creditors has fallen by 24.3% since 2011-12, but over the same period Scottish local authorities increased their use by 27.8%.

Also, in 2018-19, this continued with the use of Sheriff Officers by non-local authority creditors falling by 42%, whilst local authority use increased by 15%.

Which begs the question are Sheriff Officers advising Local Authorities to take a more aggressive approach to debt recovery to compensate for the loss of work by other creditors?

It also raises the question whether a radical overhaul of how Diligence (legal debt recovery) is executed in Scotland could significantly reduce the amount of fees that are being applied to the debts of those in default?

Scottish Councils should have their powers to recover debts increased

Now, a simple answer to this problem may simply be to increase the power of Local Authorities to recover debts.

Take, for example, Direct Earning Arrestments. These are types of wage arrestments that are used by Local Authorities and the Department of Works and Pensions for benefit overpayments. They are effectively wage arrestments.

However, unlike Earning Arrestments (which are governed by the Debtors (Scotland) Act 1987), there is no requirement for Local Authorities to use Sheriff Officers to execute a Direct Earning Arrestment. They simply send the Arrestment Schedule to the Bank themselves.

This begs the question why for Earning Arrestments, we could not allow local authorities to do the same ? If they can do it for one type of wage arrestment, why not for another, removing the requirement to use a private sector Sheriff Officer.

Which then begs the question, why then not also allow them to do the same for Bank Arrestments?

And if we are going to allow them to do that, then why not also allow them to send Charge for Payments by post?

This would arguably save tens of millions of pounds being added onto Council Tax Bills in the form of Sheriff Officer fees.

Council’s would not be alone in having such enforcement powers. As mentioned above, the Department of Works and Pensions also have the power to execute Direct Earning Arrestments without using Sheriff Officers.

The Child Support Agency and Child Maintenance Agency also have similar powers when it comes to Direct Earning Orders for child maintenance payments.

But not all debts are for Council Tax

However, this raises the question what about other debts, as not all debts are for Council Tax and not all debt recovery procedures are those mentioned above.

Well there is a simple answer to that question, in that these remaining types of debts and procedures could be recovered and executed by Court Enforcement Officers employed by the Courts.

In Northern Ireland such a model already exists where it is Court Officers rather than private Bailiffs that recover debts.

Court Enforcement Officers could therefore be employed on a full cost recovery basis by the Scottish Courts and Tribunal Service to recover these other types of debts and to carry out other types of enforcement procedures, for both Local Authority and non-Local Authority debts. They could also take on the role of Fine Enforcement Officers, who already exist in every court and can also execute bank and earning arrestments without having to use Sheriff Officers.

As all this would be done on a cost-only recovery basis, I believe it would help reduce the cost of recovering debts in Scotland for both those in debt and those that are owed debts.

It would also bring forward some radical reform to how debts are recovered in Scotland, which inevitably will have to occur anyway.

The simple fact is, if our entire system of enforcing Court Orders is being susidised by a form of Local Government taxation that none of the major political parties support, then reform will eventually be inevitable, as will how debts are recovered in Scotland.

It would seem logical to me, to begin that process of reform, sooner rather than later as currently Sheriff Officers have become overly dependent on Local Authorities for work and this is only adding to the misery of those struggling with Council Tax debts, as they are disproportionately bearing the burden of funding this no longer sustainable industry. 

Council Tax Arrears: Do you need to tell Sheriff Officers where you work?

Council Tax Arrears: Do you need to tell Sheriff Officers where you work?

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If you are in arrears with your Council Tax, do you need to tell Sheriff Officers who your employer is?

The simple answer is no, but you will have to tell the local authority if they issue you with the correct notification that requests the information.

You may choose to tell Sheriff Officers where you work, but be aware they are gathering that information so they can take legal recovery action against you. This is even the case if you do it when entering a repayment plan with them, as if you miss a payment, they may use the information at that point.

When can a Local Authority ask for your personal details?

Local authority’s can issue you with a formal notification that requires you to provide them with certain information which they can use to recover council tax arrears from you.

To do this, they first must apply for a Summary Warrant from the courts. Summary Warrants are equivalent to a Court Order.

To issue a Summary Warrant the Council must first issue you with a 7 day reminder when you miss a payment to your council tax.  If you don’t make the payment within 7 days of receiving the reminder, you will become liable for the full council tax for the year. 

If you do make the payment and then miss another payment you will receive another reminder that will tell you if you miss a third payment, you will not receive another reminder.

If you ignore any of the reminders, you will then receive a 14 day final demand to pay the full amount outstanding, although most local authorities will still enter a repayment plan with you at this point. 

Summary Warrants and Diligence

If you don’t enter an agreement with the Council or pay the full amount outstanding within the 14 days, they can then apply to the Sheriff Court for  a Summary Warrant.

A Summary Warrant is the equivalent of a Court Order. When it is granted, 10% of the amount you owe is added onto the debt.

The local authority can then give the Summary Warrant to Sheriff Officers to recover the debt you owe using legal debt recover procedures.  This means:

Once a Summary Warrant is issued, Local Authorities are also allowed to formally request certain information off you, that they can share with the Sheriff Officers to help recover the debt that you owe, using the above procedures.

What Information can Local Authorities request from you?

The type of information that Councils can request from you, is contained in The Council Tax (Administration and Enforcement) (Scotland) Regulations 1992, s31.

They can request:

  • The name and address of your employer and your place of work, or your employer’s place of business;
  • Your national insurance number;
  • The name of your bank account and your account number;
  • The name and address of any other person or persons who is jointly and severally liable for the council tax debt in respect of which the warrant or decree was granted.

How does the Council request the Information?

To request the information, the Local Authority must serve you a notification in writing. It must specify the information that they want you to provide from the information they are allowed to request.

They must also give you 14 days to provide the information.

If you fail to provide the information within the specified period, they can then give you a £50 penalty. This is not a criminal penalty,  but a civil fine.

They can then serve you a further 14 day notification.

If you fail to provide the information again within 14 days, the local authority can give you a £200 penalty this time.

They can then apply £200 penalties every time you fail to respond to a notification.

Can you Appeal the Penalty?

You can appeal a penalty if you feel it was wrongly applied. Appeals are to a Valuation Tribunal and the Local Authority should notify you of how to do this when they award the penalty.

Grounds you may use to appeal against a notification may be:

  • You did not receive the formal notification from the Local Authority;
  • You did not have access to the information that they requested;
  • You provided the information that was requested; or 
  • The notification you received did not specify the information that they told you they were penalising you for not providing.

What if you give the Local Authority the Information they requested?

If you receive a notification and provide the information that is requested, the Local Authority may pass that information to their Sheriff Officers, who could take the action specified above.

If you don’t have an agreement in place, you may wish to think about seeking advice and applying for a Statutory Moratorium. This is a temporary legal remedy that protects you from legal diligence for 42 days until you can seek advice and look at possible remedies that may be available to you.

If you have an agreement in place, no further action should take place, but if you miss a payment, then the Sheriff Officers may take action that is specified above.

Time To Pay and the Debt Arrangement Scheme

Two options you may have are to apply for are a Time to Pay Direction from the Courts or a Debt Payment Programme under the Debt Arrangement Scheme.

Both of these options will provide you with protection, even though you have provided the local authority the information they requested.

Also, just because you miss a payment, unlike with an informal agreement, this does not mean Sheriff Officers can take any of the action specified above, so you have greater protection.

A Time to Pay Direction does not fail unless you miss a payment, whilst other missed payments equal two missed monthly instalments.

Under the Debt Arrangement Scheme, a Debt Payment Programme does not fail until it is revoked.

This cannot be applied for unless you miss payments to your current council tax, or you miss a payment whilst owing the equivalent of two previous payments. 

Even when a revocation is applied for you can still make representations as to why your Debt Payment Programme should not be revoked.

If the reason you are struggling to make payments are you have become unemployed, or suffered a drop in income, you may be able to apply for a payment break that can be for up to six months. You remain protected during that period.

Points to Remember

  • Sheriff Officers do not have the power to issue a notification or issue a fine. It must be done by your local authority;
  • If you receive a notification, you must comply with it within 14 days or risk a penalty of £50; and £200 thereafter for each further time you ignore a notification;
  • You can appeal against a penalty to the Valuations Committee if you think you have grounds;
  • If you have to provide the information, you can apply for a Statutory Moratorium to allow you time to seek advice;
  • Time to Pay Directions and the Debt Arrangement Scheme offer greater protection than voluntary repayment plans and are more forgiving of missed payments.

Getting Advice

If you require further advice you should contact your local Citizen Advice Bureau or your local council and ask for contact information on your local money advice service.

Council Tax Debt Tip Sheet

Council Tax Debt Tip Sheet


 

Who Can Help?

There are plenty of free services in Scotland that are experienced at dealing with Council Tax debt such as:

These organisations will automatically check if it’s possible to reduce how much you owe, before they even suggest you pay anything.

This involves checking whether you are entitled to a Council Tax reduction, discount or even exemption. All of these, if successful, can help reduce the amount you owe, even to the extent you might not owe anything.  

For more information: visit Advice Scotland Council Tax Hub

The Iron Fist of Debt Recovery

The Iron Fist of Debt Recovery

It has been a decade since statistics were available into the use of diligence in Scotland. New figures show a country ridden with increased aggression in debt recovery, and a Sheriff Officer profession largely sustained by the enforcement actions of local authorities.

New Scottish Government figures have provided the first real look at how the use of diligence in Scotland has evolved over the last ten years with the abolition of poinding and warrant sales and the implementation of the Bankruptcy and Diligence Etc (Scotland) Act 2007.

What is revealed is that the use of diligence has increased by 134% in the last ten years and that local authorities are now responsible for 84% of all the 387,945 diligences executed in 2011/12. It is also clear Councils are now spending millions more in debt recovery than previously, with 76% of the total 338,701 charge for payments being served being done so for local authority summary warrants (prior to 2008 there was no requirement to serve a charge to execute diligence using a summary warrant.)

Non earnings arrestments have also increased with local authorities now executing more than three times the number they executed in 2002, which indicates increased aggressiveness by councils, but also possibly that more arrestments are failing and being repeated because of changes introduced by the 2007 Act, which introduced protection for minimum amounts in bank accounts.

Earning arrestment figures have also doubled, indicating changes in recovery strategy for councils and other non summary warrant lenders, but also possibly the success of the new s70A of the Debtors (Scotland) Act 1987, which introduced a new requirement on employers to inform creditors of employee’s new employment details when employment with them has ceased.

Not all diligences have, however, proved popular. The replacement to poinding and warrants sales only saw 2,758 attachments and 51 exceptional attachments being executed. Contrast that with the number of poindings in 1997 (18,980) and its clear to see the corporeal property of debtors is now safer than ever.

Money attachments have also not proved a hit with only 502 being executed nationally.

Some diligences are more common amongst certain creditors than others. HMRC, for example, most commonly use non earnings arrestments (6,437) rather than earning arrestments (467). They also are more likely to use money attachments than local authorities and other non summary warrant lenders.

Local authorities most commonly use non earnings arrestments (219,905) than earning arrestments (116,703) and rarely appear to use any other type of diligence.

Non summary warrant creditors in contrast are more likely to use earning arrestments (17,127) than non earnings arrestments (7,643) and are also the highest user of attachments (1,755), possibly indicating more intelligence based recovery as they are more likely to have information on debtors employment, unlike statutory creditors like local authorities. In one sheriffdom there were more earning arrestments executed for summary warrant debts than non earnings arrestments, but that was the exception.

A number of conclusions can be drawn from these statistics.

First, recent criticism that Scotland has become overly debtor friendly is not true, but clearly local authorities are struggling to recover local taxes.

Second, it is also obvious that although many of these problems may disappear should Scotland introduce a Scottish Income Tax, collected at source this will have a dramatic effect on Scotland’s legal debt enforcement system as sheriff officer firms are clearly over dependent on local authority revenue.

Third, if the whole purpose of the review carried out by the fist Scottish Executive into debt recovery which culminated with the Striking the Balance Report was to create a less coercive system then it’s failed. Even allowing for changes in tactics, no one could have imagined a 134% increase in the use of diligence. The recent growth in schemes like the Debt Arrangement Scheme, which now see over 3,000 people applying per year, is still not enough, when over 338,701 Charge for Payments are being served, 134,297 earning arrestments are being executed and 233,985 non earnings arrestments are being applied for. It is clear the collaborative approach that was hoped for is still not being achieved and legal debt recovery is still, in relation to local authorities at least, based on a hit and miss, threat based approach rather than one based on intelligence and working with debtors.

It also doesn’t help that the Scottish Government has still not implement S74D of the Debtors (Scotland) Act 1987, which requires lenders within 48 hours of executing a non earnings arrestment to serve on the debtor a Debt Advice and Information Package advising them where and how to seek advice on how to deal with their debts.

There is no easy answer to the current problems, but encouraging more people to seek advice and agreements with their creditors should be a priority for the Scottish Government; also a further review of local authority enforcement powers under the summary warrant procedure is now long overdue. It should be borne in mind that widespread abuse of these powers and the diligence of poinding and warrant sales is what eventually discredited that diligence and led to its abolition: we can avoid repeats with other diligences by acting now.