Rugby Borough Council writes off £1.3m of tax debts and benefit overpayments
It includes £548,000 worth of council tax
Rugby Borough Council has written off its chances of collecting £1.3 million worth of taxes or benefit overpayments – including £592,000 where debts were left for too long.
Last week’s report to the cabinet – the panel of Labour and Liberal Democrat councillors in charge of major service areas – detailed the circumstances of 2,065 debts that the authority no longer believes it can recover.
It includes £548,000 worth of council tax, £187,000 in non-domestic rates and £307,000 worth of housing benefit overpayments.
Insolvency can preclude the council from standard recovery options with 456 debts totalling £789,000 falling under this category. A further £122,000 was deemed irrecoverable from 206 debts where someone had died.
A further 146 debts owed by people whose whereabouts could not be traced saw another £116,000 written off but the biggest chunk of cases – 496 – related to ‘unrecoverable due to the age of debt’.
Generally, authorities have up to six years to either collect or formally enforce a debt in England and Wales – timely enforcement action can enable collection after the six years has elapsed.
These 496 cases come to a total of £592,215.
New rules brought in at June’s meeting of full council requires the cabinet to approve cases where the write-off is £10,000 or more. It applies in circumstances where an individual’s overall debt to the council tops that figure irrespective of whether it is made up of more than one debt.
Ten such cases are highlighted in the cabinet report with county court judgements not enough to recover housing benefit overpayments of between £12,000 and £23,000 across four cases than spanned a number of years. All are now listed as ‘unable to trace debtor’.
One case was across an eight-year period between 2003 and 2011 where a debt of £22,199 built up.
Another three-year backlog of non-domestic rates, totalling more than £24,000, has been written off because the debtor is in prison.
Provided enforcement action has commenced within statutory timeframes, the write-offs do not prevent the council revisiting the cases if circumstances change. However, the report is a broad acknowledgement that the council does not expect to recover these funds with the debts removed from its anticipated income.
Rugby Borough Council had bad debt provision of £13.483 million with these write-offs reducing that to just under £12 million.
The cabinet passed the £10,000-plus write-offs and noted the other cases, which do not require approval, without comment.
When this revised policy was approved by full council in June, Councillor Dr Andrew Glowacki (Reform UK, Admirals & Cawston) asked how the cabinet would “satisfy itself that all recovery avenues have been exhausted”.
Portfolio holder for people, resources and governance Councillor Ish Mistry (Lab, New Bilton) offered to share the process with him, insisting staff “go through all steps” to recover debts, that write-offs were “a last resort” and that debts can be revisited if circumstances change.
“If someone does come back, I can assure you that officers will chase them up,” he said.