The Truth About Council Tax. Latest Developments.

In order to keep our readers up to speed on developments in research about the lawfulness (or otherwise) of Council Tax, may I suggest that you check out the following posts on the UK Column mentioned in the article below.

 

The Truth About Council Tax. Latest Developments.

 

I am not a lawyer. I am entitled to rely on authorities and Judgments to tell me what the law is.

 

I refer the reader to two previous articles about this subject of Council Tax and tax payers money disappearing on the UK Column Site:

http://www.ukcolumn.org/article/section-151-officer-council-tax-and-fraudulent-accounting

http://www.ukcolumn.org/article/truth-about-raising-council-tax

 

It seems that certain elements of central government are concerned about money raised by taxation which then disappears apparently overseas:

“Press release

Councils have over £22 billion in reserves

From:

Department for Communities and Local Government and The Rt Hon Greg Clark MP

First published:

19 November 2015

New figures published today show that England’s 444 local authorities hold £22.5 billion in non-ringfenced reserves.

In the last 15 years, the amount held by local authorities in their non-ringfenced reserves has increased significantly – by nearly 170% in real terms.

Communities Secretary Greg Clark said that he recognises the need for councils to be responsible with taxpayers’ money and save for the future but they should also make efficient use of their assets and resources to best meet the needs of their local communities.

Communities Secretary Greg Clark said:

With local government accounting for a quarter of all public spending, it is right that they are called on to play their part in dealing with the deficit.

Today’s figures show how they are well placed to do so, with local authorities holding £22.5 billion held in non-ringfenced reserves – up 170% in real terms over the last 15 years.

As we continue to secure our country’s economic future and cut the deficit, now is the time to make efficient use of their assets and resources to provide the services local people want to see.

Today’s figures show that over the past year, local authorities added nearly £1 billion more to their non-ringfenced reserves – taking the total to £22.5 billion.

This is up from the £13 billion local authorities held in 2010.

Today’s local authority revenue expenditure and financing statistics include this statement:

In real terms from 2000-01 to 2014-15, revenue expenditure (local authority spending) has risen by 20.5%, government grants awarded to local authorities have risen by 21.1%, and Council Tax has risen by 21.4%. In real terms, non-ringfenced reserves have increased by 169.9% from 1 April 2001 to 1 April 2014.

https://www.gov.uk/government/news/councils-have-over-22-billion-in-reserves

 

This is despite previous attempts by ministers to address the issue:

 

“Press release.

Councils amassing secret stockpiles of taxpayer money says Local Government Secretary

Latest figures confirm councils have now amassed £19 billion in reserves.

Local Government Secretary Eric Pickles today (28 November 2013) said councils are misleading the public if they claim they have no money left, but they stuff billions more of taxpayers’ cash into their municipal piggy banks.

Latest figures published today confirm that councils have increased their cash reserves by over 20% in real terms since 2010 to 2011. Reserves now stand at over £19 billion – an increase of £2.6 billion in the last year alone.

Mr Pickles called on local authorities to consider whether such substantial reserves are necessary at a time when they should be focusing on protecting frontline services for residents and making sensible investments for the longer term.

Councils account for a quarter of all public spending. In total councils are forecast to spend £102 billion in 2013 to 2014 – up 4% from their forecast the year before.

The figures also show that councils’ in-house spending continued to rise by a further 2% despite repeated calls by ministers to reduce administration costs and overheads.

Local Government and Communities Secretary Eric Pickles said:

There are no rules on what councils should hold in reserve and taxpayers will be amazed that while councils are amassing billions in secret stockpiles some are pleading poverty and raising Council Tax bills for hard working families.

Everyone appreciates the need for a financial umbrella for those rainy days but keeping reserves at levels unprecedented in recent years should give local residents pause for thought. Instead they could be tapped into to ensure councils can protect frontline services and keep Council Tax down for hardworking people.

Councils can also look at using reserves to pay for the short-term costs of restructuring their management structures to save millions in the long-run…”.

https://www.gov.uk/government/news/councils-amassing-secret-stockpiles-of-taxpayer-money-says-local-government-secretary

 

If central government is powerless to stop this trend the time has come, I submit, for lawful rebellion to do the job.

We are fortunate that three recent Court Judgments have clarified local authority’s responsibilities regarding what are known as “reductions” in Council Tax which can be claimed by individuals.

As described in the article above about the raising of Council Tax, s.13A of the Local Government Finance Act 1992 (the 1992 Act) allowed for reductions. This was amended by a new measure, the Local Government Finance Act 2012, at s.10(c) (the 2012 Act):

“Council tax reduction schemes

(1)For section 13A of the LGFA 1992 (billing authority’s power to reduce amount of tax payable) substitute—

(c)in any case, may be reduced to such extent (or, if the amount has been reduced under paragraph (a) or (b), such further extent) as the billing authority for the area in which the dwelling is situated thinks fit….”.

http://www.legislation.gov.uk/ukpga/2012/17/section/10

I will point out here that the people at legislation.gov.uk have been a bit remiss.  The entry on s.13A of the 1992 Act does not mention that its wording has been replaced by s.10 of the 2012 Act. I only found this out the hard way by withholding my Council tax under Article 61 of Magna Carta, for the Bradbury Pound and several other reasons. I have recently discovered that the correct term for parts of treaties is “articles” not “chapters” incidentally.

This is an inevitable consequence of being a “litigant in person”. The official side, who have ready access to legal databases, have no excuse for not knowing about the new statutes (or not complying with them) however.

The 2012 Act came about because central government council tax benefit was replaced by local council tax reduction schemes.

 

Regarding what actually happens when individuals claim discounts, at least three Billing Authorities (Powys, Sedgemoor and Mendip) claim that the 2012 Act means that only financial reasons remain as reasons for reductions. This is probably because the relevant part of the “Explanatory Notes” (found at a Tab on the legislation.gov.uk page for the 2012 Act) is poorly worded. Mendip Council quoted this error to me in correspondence.

The Courts have tested the interpretation of s.10 of the 2012 Act and come to a different conclusion in at least two cases.

The first case is known The first is The Queen v Winder, Dowan & Hampton; Neutral Citation Number: [2014] EWHC 2617 (Admin) the information part of the Judgment at para.10 states,

“10.       Section 13A(1) provides:

The amount of council tax which a person is liable to pay in respect of any chargeable dwelling and any day (as determined in accordance with sections 10 to 13) –

  • in the case of a dwelling situated in the area of a billing authority in England, is to be reduced to the extent, if any, required by the authority’s reduction scheme (see subsection (2));
  • in any case, may be reduced to such extent (or, if the amount has been reduced under subparagraph (a)…, such further extent) as the billing authority for the area in which the dwelling is situated thinks fit.”“Therefore, an authority must reduce an individual’s council tax as required by a CTR Scheme (section 13A(1)(a)), and nevertheless has a residual discretion to do so outside the scheme (section 13A(1)(c)).”
    http://www.bailii.org/ew/cases/EWHC/Admin/2014/2617.html

 

So Councils still have “discretion” to accept applications for reductions for any reason.

 

The second case is Appeal to the VTE – LGFA 1992, s.16(1)(b) – scope of appeal – powers of VTE – VTE (Procedure) Regulations 2009, reg. 38(1) Appeal Numbers: 1. 2001M113393, 2. 2001M117503

Para 5. Of the Background f this case says this:

“5. Three things may be noted here:

  • discretionary relief is applicable both to those who have been awarded a reduction under a council tax reduction scheme and those who have not (“may be reduced to such extent (or if the amount has been reduced under paragraph
    • ) . . ., such further extent)”: s.13A(1)(c));
  • as schemes must stipulate the procedure for applying for a reduction (or further reduction) under section 13A(1)(c), it follows that authorities must consider every such application on its merits; and
  • whereas there must be a formal, published scheme for council tax reduction, there is no requirement for a scheme governing discretionary relief, unless there has been a “determination” pursuant to section 13A(7) that a class of case is to be reduced in accordance with that determination.”
    http://www.bailii.org/ew/cases/Misc/2014/B46.html

In other words Councils must accept applications for “discretionary relief” and in certain circumstances must publish their “scheme” for doing so.

These Judgments mean that any objections by Council Tax payers for unjustified demands for money will have to be dealt with by Councils. See John Hurst’s video in the “truth about Council Tax” document above for some suggestions.

Incidentally, Para 6. Of the second Judgment says this:

“Those unfamiliar with these matters may be surprised to learn that elected members play no part in these decisions (at least in East Riding of Yorkshire Council). An application for discretionary relief is first dealt with by an officer. If the applicant is dissatisfied, it will then be reconsidered by another officer (who, so far as I can tell, need not be senior to the first)…”.

This is, I suggest, Judge speak which supports John Hurst’s contention that it should be elected Councillors, not officials, who make decisions about taxation in order to comply with the Petition of Right 1627. IIRC Sedgemoor Council uses their s.151 officer to make these decisions which raises a problem of who to complain about this too.

Powys Council does the right thing and gives elected councillors the job.

There is one more recent Judgment to bear in mind. In London Borough of Ealing and ors. Case No: CO/3242/2014 CO/3235/2014 CO/3246/2014 High Court of Justice Queen’s Bench Division Administrative Court 29 January 2015 [2015] EWHC 161 (Admin)2015 WL 55978 it was confirmed that the burden of proof for applications for reductions is on the claimant and that the Billing Authority “Schemes” should indicate what evidence they require.

It also made the observation that false claims would be criminal offences of fraud. That works both ways of corse. Unlawful decisions by Billing Authorities should also attract criminal sanctions for the individuals concerned.

It seems that the UK Column will be supporting efforts to bring spendthrift local authorities to account. One point should be noted, when an individual makes a claim for a reduction according to a common right (and duty) such as Article 61 of Magna Carta, the claim applies to all potential tax payers in that jurisdiction and requires a published scheme as noted above.

A co-ordinated campaign to make claims to all Billing Authorities in England and Wales would get their attention.

We are not alone apparently. From the “Debt Resistance” site:

“The City is exploiting our councils. Time to defend local democracy

Local Government finance has been co-opted to work in the interests of the private sector, and not in the interests of the people. Bankers, brokers and advisors have colluded to trick councils into taking out expensive, risky loans which endanger essential services.

Find Out More…”.

http://lada.debtresistance.uk/glossary/lobo/

 

“ Local Authorities are borrowing from private banks instead of the Government Public Works Loan Board (PWLB) even if it is more expensive to do so. Central Government is encouraging this, as it pushes public debt off the government balance sheet. As a result, tax payer money is being unnecessarily wasted, and  profits from lending are going to the banks rather then recirculating into the public sector. At Newham Council, LOBO loans are costing ratepayers an extra £13million each year in interest payments.

Banks are providing “teaser rate” loan contracts to public authorities called LOBO loans that contain derivatives. These loans are potentially illegal as Local Authorities were prohibited from taking out swap contracts (a form of derivative) following a 1989 ruling known as Hammersmith and Fulham vs Goldman Sachs case.

Who is watching?

No one! Local Authority finance is unregulated by the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA). Documents regarding borrowing from private banks are not available to the public and auditing is outsourced to the auditors of the banks, the big four accounting firms – following the closure of the Local Government Audit Commission in April 2015…”.

http://lada.debtresistance.uk/the-issue/

 

“What can we as citizens do?

When Central and Local Government are not acting in the interest of citizens, we must call them to account and demand change. Debt Resistance UK is building a campaign to facilitate citizen-led Local Authority Debt Audits, to provide information and tools for those who want to challenge Local Government financial decisions. We want to assist other campaigns and grassroots groups to further their own struggles (anti-cuts, divestment, etc) by ensuring public borrowing and spending decisions are always transparent, and made in the public interest…”.

http://lada.debtresistance.uk/the-issue/

“What can we as citizens do?

When Central and Local Government are not acting in the interest of citizens, we must call them to account and demand change. Debt Resistance UK is building a campaign to facilitate citizen-led Local Authority Debt Audits, to provide information and tools for those who want to challenge Local Government Financial decision, and to help other campaign and grassroots groups in legitimising their own struggles (anti-cuts, divestment, etc).

LOBO loan contracts are not currently publicly available. This is unacceptable and must be challenged. In cases of public borrowing where the costs are substantial, yet the public benefit is unclear, or contract terms are stacked unfairly in favour of private sector providers, we must demand that the contracts be legally contested, renegotiated or annulled.

To support local action, Debt Resistance UK is building a campaign to facilitate citizen-led Local Authority debt audits. We intend to provide information, tools and training for citizens so that they are equipped to read accounts, request contracts and challenge parts of the Council accounts…”.

http://lada.debtresistance.uk/what-can-we-as-citizens-do/

 

“Find out how to audit your council’s debt, challenge the illegitimate lending practices of the City and help reclaim local democracy…”.

“Local Authority finance is unregulated by the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA). Documents regarding borrowing from private banks are not available to the public whilst  auditing is outsourced to the panel auditors of the banks, the big four accounting firms…

Since the Local Government Audit Commission ceased to exist as of March 31 2015 (a result of Eric Pickles austerity cuts), no effective scrutiny of Council financial decisions by Government exists. The Audit Commission was the only independent government body directly responsible for scrutinising council spending activities…

“LOBO” loan contracts are not publicly available without making FOIA requests. All public borrowing decisions should be transparent and presented in a way that is easily understood, especially when borrowing via private institutions…

LOBO stands for Lender Option Borrower Option. It is typically a very long-term loan – for example 40 to 70 years. The interest rate is initially fixed, but the lender has the “option” to propose or impose, on pre-determined future dates, such as every 5 years, a new fixed rate. The borrower has the ”option” to either accept the new rate or repay the entire loan. The starting interest rate of a LOBO loan is usually quite low, designed to undercut PWLB loan rates, and is known as a “teaser rate”…”.

http://lada.debtresistance.uk/lobos/who-is-watching/

 

Now we come to some proposals for how to register our concerns about maladministration by Councils. Moving on from the two articles at the beginning of this article, I submit that demands for Council Tax made by Councils (not all Billing Authorities are Councils) which are not justified cannot be enforced.

It s important to bear in mind that the power of a Magistrates Court does not include determining whether a claim is justified, only that it has been made by a billing authority. There is a procedure to reverse a decision to issue a Liability Order but the main focus here is on the individual Councillor or official makes decisions as to liability.

 

Again, we are not alone with measures to hold these people to account:

 

The best kept secret in council tax law

One of the best-kept secrets in council tax law (most lawyers and advisers have never heard of it!) is that your council has a special power to reduce your council tax bill.

If you live in England and Wales, your local council has a discretionary power to reduce your council tax. This is available to help people and may be granted on top of any existing reduction or help you may already receive. However, it’s not being widely publicised…”.

http://benefitslegalgroup.org.uk/2014/01/discretionary-council-tax-reduction/

The Benefits Legal Group site includes specimen letters for claiming discounts. There is also information about recent Judgments which reinforce the ones described above.

http://benefitslegalgroup.org.uk/2015/02/council-tax-timebombs/

Note that the remedy in the event of a well founded claim for a reduction is a Valuation Tribunal. That is the reason why their Judgments are referred to above.

It is not clear to me how much power this body has. They deserve an opportunity to prove themselves.

I would also submit that the concept of challenging an incorrectly set tax works both ways, plus or minus. Some would say that police forces have of late been starved of funds. In which case a challenge could be made that the amount claimed in Council Tax was incorrect until the police precept is increased.

Such an argument would call into doubt everyone’s Council Tax bill, not just the person who made the complaint. The same would apply to claims for reductions based on Magna Carta, terrorism statutes and the Bradbury Pound. This would require Councils to formulate and make public their policy on those subjects because they are caught by s.13(7) of the Local Government Finance Act 2012:

“7) The power under subsection (1)(c) may be exercised in relation to particular cases or by determining a class of case in which liability is to be reduced to an extent provided by the determination…”.

http://www.legislation.gov.uk/ukpga/2012/17/section/10

Note the phrase “class of liability”.

 

There you have it. We are not alone. What if every council and billing authority in the country were subject to challenges about there accounting backed up with what amount to lawful tax strikes?

 

 

 

 

 

 

 

 

 

 

 

Nothing on this website is to be construed as legal advice.