Each proposed data-sharing arrangement under this power will be subject to a pilot process which will be set out in a statutory code of practice to measure the effectiveness of the information-sharing.
Birmingham City Council is taking part in the trial working with HMRC to be among the first to use the debt information sharing powers introduced by the Digital Economy Act (2017).
During this trial non-paying customers who are employed or have an income will be contacted to start paying their arrears, or they will face having their debt deducted directly from their earnings through their employer.
Citizens Advice has responded to the scheme raising concerns that the council tax collection practices must not leave people with too little to live on.
Council tax arrears is the most common debt problem Citizens Advice helps people with. In 2018 its local services around England and Wales helped more than 96,000 people struggling to make their council tax payments.
The national charity estimates over £560 million in fees were added to people’s council tax debt in 2016/17 alone. This includes £300 million of bailiff fees, some of which have to be paid by the person in debt before any council tax arrears can be recovered by the local authority.
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Council tax pilot to recover debts direct from workers’ wages 16 July 2019
Last week we published a news item relating to an announcement by the Financial Times about a pilot scheme affecting some local authorities in England which will use information sharing powers to recover unpaid council tax debt directly from earnings.
Given the limited information that was published by the Financial Times, we do not know what the mechanism for these deductions will be and what the process for notification will be, e.g. CTAEO or another type of notification.
We asked HMRC if they could provide any detail. What they did confirm is that a degree of coordination was provided by Cabinet Office and HMRC were involved to ensure data was shared and used legally. However, the pilot is not HMRC led. Local authorities have lines to take for queries and know not to direct anyone back to HMRC.
The CIPP are trying to find out further information from the Local Authorities involved and will update you as and when we can.
We appreciate not everyone will have been able to access the article from the Financial Times, so for information, below is the complete text:
“ Councils look to take unpaid tax from debtors’ wages – FT, p3
The government is considering allowing local authorities to deduct unpaid council tax debts directly from people’s wages, in a move that could shore up councils’ finances and reduce their reliance on bailiffs.
A trial scheme involving 4,000 people in arrears across 29 districts will begin on July 8, with Britain’s tax authority providing councils with the debtors’ employment information.
It comes after local authorities were criticised by MPs and debt charities for using bailiffs to collect council tax arrears from millions of homes.
Council executives say that if the programme is rolled out nationwide it will dramatically reduce the need to employ bailiffs, whose fees and charges can increase a missed council tax payment by more than 1,200 per cent, disproportionately affecting those on low incomes.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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