Medway Council owed £24million in unpaid council tax since 2019
13:22, 21 August 2024
updated: 13:09, 27 August 2024
A cash-strapped council has missed out on £24million in unpaid council tax over the last six years.
Despite enhancements to recovery methods and additional inspections, Medway Council is still missing millions of pounds residents have been billed for.
The local authority is owed £10 million in unpaid council tax from the last financial year alone, and £14 million more remains uncollected since 2019.
But the council says it is employing all means necessary to claw it back.
The authority successfully collected £181.4m in council tax last year from a total of 120,583 properties in the tax system.
Figures show just over 19,000 council tax accounts had an unpaid amount due at the end of the 2023/24 financial year.
While the missing amount only represents 5% of the total revenue collected from council tax, Medway Council has faced financial problems in recent years, and has had to cut services and spend reserves to make ends meet.
Last month, the first round of budget monitoring predicted the authority would overspend its budget by £16.5 million, a figure which needs to come down before February.
The council expects, as part of its budget-setting process, that it won’t collect all council tax which it is owed, however it doesn’t wipe off the debt immediately and pursues it for as long as it is financially viable.
The amount of uncollected council tax at the end of the financial year has increased by just under £5m in Medway since 2019, with the figure then being £5.6m.
The council gradually collects the unpaid amounts from previous years, and £4.4m of the £5.6m from April 2019 has since been collected.
At the end of the 2022/23 tax year, the council had just under £9m missing, of which £4m has since been collected.
The combined total of unpaid council tax from each financial year since 2019 is £45.8m, but £22m has now been clawed back with £24m still outstanding.
Anyone who misses a payment will be contacted by the council and if warnings go unheeded the person will be sent a magistrates’ court summons where a payment plan to gradually cover the debt will be agreed. However, if there are still issues with paying the authority can take stronger action.
There are multiple methods for collecting council tax in arrears, including using benefits or earnings orders - where money is taken directly from any benefits received or from a person’s paycheck until the owed money has been paid off.
For an earnings order, the council contacts the employer and tells them to deduct a percentage of the wage packet to send to the council. They can also ask for an additional £1 each month to cover administration costs.
The authority can also pass off the debt to be collected by enforcement officers or bailiffs who will ask for the payment in full of the remaining debt and, if the person cannot pay, are able to make a controlled goods agreement (CGA) where possessions up to the value of the debt are taken in place of the money.
Nationally, councils are facing an increase in council tax being unpaid, with the total across the country reaching £6 billion - almost triple what it was a decade ago.
This is in part because of households facing their own financial pressures and not being able to afford to pay the council tax they owe.
Medway Council does have options for people on lower incomes in order to give them relief and discounts on their council tax, and currently 3,772 accounts have 100% council tax reduction and 12,284 accounts have partial council tax reduction in the Towns.
In November last year, the authority said it was hiring an officer to review council tax accounts with the single-payer discount (SPD) and estimated it would bring in £800,000 from the removal of the discount from those who didn’t deserve it.
At the time 37,696 accounts had the SPD, and at the end of January 1,601 accounts were identified as incorrectly having the discount, the removal of which represented an increase to the council’s takings of £575,000.
A Medway Council spokesman said: “We regularly collect 94 to 95% of the current year’s council tax in-year but we continue to collect any outstanding debt in subsequent years.
“Our final collection rate for each year is around 99% which is comparable with most other councils.”
It also said the authority had spent £160,000 on enhancements to council tax recovery methods and additional inspections, which it estimates will reduce the council’s bad debt provision - which covers write-offs - by £1m and bring in £146,000.
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