Grimsby Magistrates' Court and

Victoria Street
Grimsby
North East Lincolnshire
DN31 1NH

xxx xxxxxx
Grimsby
North East Lincolnshire
XXXX XXX

14 January 2016

Dear Mr Xxxxxx

Re: North East Lincolnshire Council (NELC) Summons Costs 2015/16

I am writing in the matter of NELCs breakdown of Council Tax summons costs. The
calculation is reviewed annually and published on NELCs website to inform taxpayers of the
standard sum it applies, for the relevant tax year. The most recent calculation returns the
standard sum applied in cases for 2015/16. I will send a copy for your reference in case NELC
has not already supplied one.
I have done some research in this area and consequently become familiar with the kind of
expenditure billing authorities in general consider they are entitled to attribute to the costs
recharged to defendants. I have consistently found that billing authorities claim entitlement to
recharge all expenditure which may be considered attributable to recovery and enforcement in
respect of merely applying for a liability order. In the case of NELC, this can probably be best
illustrated in its response to a Freedom of Information request which asked for a breakdown
of its costs. The Decision Notice (ref: FS50400874) at paragraph 15, records the admission
that the costs are set, not at a level to cover the court application, but for recovering Council
Tax, ultimately in a bid to safeguard the taxpayer from having to bear any element of recovery
administration.
the costs raised from the increased Summons costs are to cover the cost of
recovering Council Tax, and do not represent income generation but a saving that
can be made in the cost of the delivery of the service for the benefit of all Council Tax
payers of North East Lincolnshire

As a final safeguard in a series of checks to be satisfied its costs are claimed lawfully, NELC
ensures that the monies raised from them do not exceed the cost of the service. The
service budget, however, refers to the costs reasonably incurred for Council Tax collection

and recovery, and in the period relevant to the request, that was 1.1 million. NELC implies
that because court costs income is within its annual budget for all activity associated with
recovery of Council Tax etc., it considers that its claim is lawful, as reinforced in a rewording
of the above also at paragraph 15 of the Decision Notice:
The monies raised from costs are not greater than the cost of the service. The increase
in summons costs does not represent income generation but a saving that can be
made in the cost of the delivery of the service, that would otherwise ultimately be
passed on to the Council Tax payers of North East Lincolnshire .
A number of authorities have even gone further by admitting explicitly that the cost of
administrating the various recovery methods available to secure payment, once a liability
order has been obtained, is legitimate expenditure to recharge in applying to the court to
enforce the debt. Whether any of that expenditure is included in the calculation would require
a proper breakdown rather than just a rough estimate, though it is more than implied in the
Decision Notice referred to that post liability order work is recharged to the costs. The law is
clear that only costs which have reasonably incurred in obtaining the order are permissible.
Interpreting the law in a way that extends to encompassing all recovery and enforcement
expenditure is generally justified by the fact that it serves to keep the financial burden on the
general taxpayer to a minimum, even though the law in fact provides only for application
costs. NELC has demonstrated this thinking as aforementioned but reinforces it in a report
from February 2014 (Review of Council Tax court costs) which briefly outlines the risks of
either levying a higher level of court costs than recommended or a lower level. The relevance
in this context, was the risk outlined which was associated with opting for a lower level than
recommended, as follows:
Members may choose to levy a lower level of costs than that recommended, however,
this would mean that additional costs incurred by the Council due to non-payment are
borne by those Council Tax payers who pay on time in accordance with their
instalment plan.

Artificially inflating Costs

It is evident from NELCs expenditure breakdown that the standard costs include a significant
subsidy for bad debt. The sum recharged to customers is artificially inflated from the element
of bad debt brought about by defendants, who for example, may have no means to pay. Those

debtors are then being subsidised by those from whom payment is more easily recovered. The
aforementioned report (Review of Council Tax court costs) confirms this, as follows:
The Council recognises the difficulties some residents have encountered in paying
Council Tax as a result of Welfare Reform changes, and as a result has been more
flexible with instalment arrangements. In cases where residents owe a modest amount,
and have subsequently made an arrangement which clears the balance within the
financial year, costs have not been applied. It is anticipated that such action will
continue into 2014/15.

The approach taken in calculating the costs confirms that standard sum is inflated because of
bad debt. The average individual costs are determined by dividing the gross expenditure by an
estimated number of summons requested where costs applied. There is a significant
difference between the number of summons requested, and the number of summons requested
where costs are applied. The dividing figure used in NELC's 2013/14 (2014/15) calculation
was 10,000, but the figure submitted to the Chartered Institute of Public Finance and
Accountancy relating to the number of summonses issued in 2013/14 was 17,197. Therefore,
at least 42% of taxpayers against whom complaint was made were summonsed without costs
applied. The relevant part of the Councils breakdown is presented as follows:
Gross Recoverable costs
Estimated number of summons requested in 2013/14,
where costs applied
Cost per summons

Cost rounded to nearest

597,160

10,000

59.72

60

If the true number of summons issued (17,197) was substituted for the 10,000 figure above,
the cost per summons, based on the Councils method of calculating the sum (disregarding
other expenditure in question), would return a sum of 34.72.
Viewed from another perspective, NELC has incurred costs in respect of each one of the
17,197 summonses requested; in over 7,000 cases it has been unable to recover that cost from
the defendant summonsed. Instead it has added that expenditure to the costs of those against
whom court proceedings are brought and the costs paid. This means that those taxpayers who

actually pay the costs are paying an inflated sum to either compensate for NELC instituting
the complaint erroneously or subsidise the costs of those others having them waived.
Recovery officers at NELC attended a presentation/workshop in June 2015 hosted by the
Institute of Revenues Rating and Valuation which focussed on the consequences of the
decision in R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252 (Admin). It is likely
then that NELC would aim to determine the costs in accordance with the principles
highlighted by Mrs Justice Andrews in that High Court judgment. It is particularly with
regard to paragraph 46 of the judgment and reference to artificial inflation of costs that
NELCs breakdown reveals that this is done. In setting out what is and what isnt permissible
expenditure, para 46 of the judgment, strongly implies the approach taken whereby a much
lower figure than the actual number of summonses applied for is substituted into the equation
is not permissible (see below):
In principle, therefore, provided that the right types of costs and expenses are taken
into account, and provided that due consideration is given to the dangers of doublecounting, or of artificial inflation of costs, it may be a legitimate approach....

Standard charge levied in all cases

It is assumed that the Council seeks reliance on the judgment (paras 45-46) in its approach of
levying a standard sum of costs across the board, thus having no obligation to calculate costs
individually on a case by case basis. Though that is the general guidance, it must also be
applied taking on board Mrs Justice Andrews opinion that in principle, it may be a legitimate
approach, 'provided that the right types of costs and expenses are taken into account'.
J Andrews expressed at para 46 that it may be a legitimate approach to apply a standard sum
in all cases. However, if wanting to take that approach (and do so lawfully) the standard sum
would also have to be properly referable to the Council Tax (Administration and
Enforcement) Regulations 1992 (regs 34 and 35). If there is any doubt as to what these
regulations provide, clarification has been provided in the Council Tax Practice Note 9:
Recovery and Enforcement, produced by the Department of the Environment (1993) and more
recently in the 2013 Government good practice guide, for the collection of Council Tax
arrears. Both state that the amount claimed by way of costs in any individual case is no more
than that reasonably incurred by the authority.

Given that the amount claimed by way of costs in any individual case must be no more than
that reasonably incurred by the billing authority, if the Council wanted to take advantage of
streamlining the administration process by applying a standard sum in all cases, in order for it
to be done lawfully, it would need to forfeit each element of expenditure it incurs that is not
common to every application. So in this, and all similar breakdowns, that would account for
the largest element of expenditure.
In other words, a standard sum could not exceed that incurred by the authority in a case where
the least expenditure is attributed. In practice, that would be a taxpayer who simply settles his
outstanding debt on receipt of a summons, but without contacting (thereby burdening) the
Council on any issue. Deriving a figure therefore from the gross costs, which is split between
an estimated number of defendants, can not be lawful; even less so if the number of summons
is reduced to factor in an estimate for those withdrawn, waived and those in respect of
unrecoverable costs.
The least cost case is the only basis on which to determine a standard sum if the aim is to
eliminate the administrative burden of calculating the costs in each case, whilst at the same
time complying with the regulations which require that the costs be no more than that
incurred by the authority in any individual case.
I hope the above information will be of use for the court to determine in future a suitable level
of costs which are in accordance with the relevant provisions.
Should you have any questions, please don't hesitate to contact me.

Yours sincerely

X. Xxxxx