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December 6, 2016
Is Insolvency Action an Effective Way to Recover Council Tax?
December 6, 2016

The Effect of Challenging Council Tax Liability in Bankruptcy Proceedings

Welbeck Solicitors Debt Recovery Solicitors

By Welbeck Solicitors LLP on 07/06/16 | Category – Bankruptcy

Following the recent case of Okon v London Borough of Lewisham ([2016] EWHC 864 (Ch)), the High Court held that a liability order made in respect of unpaid council tax – and in accordance with the Local Government Finance Act 1992 – cannot be the subject of substantive dispute at the hearing of a bankruptcy petition.

Indeed, Robin Hollington QC, sitting as a Deputy Judge of the Chancery Division, found that the only appropriate route for a debtor faced with a bankruptcy petition that is based on a council tax liability order(s) is to appeal that liability order(s) to the relevant Valuation Tribunal.

Consequently, on hearing a bankruptcy petition based on a liability order, the court cannot investigate the merits of the liability order or set it aside but it can adjourn the hearing of a bankruptcy petition to allow such appeal to be made or, if the bankruptcy order has been made, rescind the bankruptcy order in an appropriate case.

In the postscript expressing his concern at the uncertainty over the right approach to take, Deputy Judge Hollington said the cases of Wiltshire Council v. Piggin [2014] EWHC 4386 (Admin) and Yang v. The Official Receiver, Manchester City Council [2013] EWHC 3577 (Ch) deserved to be more widely known than they appeared to be.

Although the circumstances of these cases are somewhat different to Okon, they are interesting and certainly worth taking some time to read through.

Whilst this decision does not represent new law, insolvency proceedings remain an effective tool for local authorities tasked with collection of council tax and business rates.

Indeed, having worked with a number of councils throughout the Country, we fully understand the pressure placed on Local Authorities to maximise the collection of council tax and other charges and we are more than happy to work with you to help you meet the ever increasing burden of expectation placed on you by Central Government.

We will be happy to discuss the use of insolvency action as an effective recovery tool with any Local Authority and assist in implementing procedures that will alleviate the risk of criticism from external organisations such as the LGO.

If you are interested in discussing any insolvency issues with us, please contact Mark Hodges or Jeremy Boyle on 020 7467 3999 or by e-mail to mh@welbecksolicitorsllp.co.uk/jb@welbecksolicitorsllp.co.uk

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