This blog will answer the question “Can council tax be statute barred?” It will cover the limitation period for council tax, limitation period and related rules in general, what happens if you are in council tax debt, before it becomes statute barred, what happens after and such other topics.

Can council tax be statute barred

Yes, council tax can be statute barred after 6 years. If the Local Authority doesn’t issue a Summons before the end of 6 years from the date of issue of the Demand Notice then they cannot get the debt enforced. They can still chase you for the money, but not enforce it upon you.

Priority Debt

Priority debts are those debts which you should pay firsthand on a priority basis. Your local council has strong powers to make you pay their debt. Therefore, it is a priority debt. This implies that you need to pay council tax before paying non-priority debts such as credit cards or unsecured loans.

Statute Barred

Statute barred means an act barred due to a legal statute. If a creditor takes too long to react for a debt recovery, it can become statute barred, meaning the creditor can no longer go to court to recover the debt. A statute barred debt means that the lender is out of time to make you pay his debt. 

Being statute barred does not mean the debt no longer exists. It implies that although the debt still exists, it is written off. The creditor or a debt collection agency can still try to recover money from you and you can choose to pay it, it might still be on your credit reference file. It just cannot be enforced upon you.

Limitation Period

The Limitation Act 1980 set out the rules on how long a creditor gets to take debt recovery actions against you. These time limits depend upon the type of debt you have.

Most types of debt in England, Wales and Northern Ireland have a limitation period of  6 years, while the limitation period in Scotland is 20 years. The common debts include credit or store cards, personal loans, gas or electric arrears, council tax arrears, benefit overpayments, rent arrears, overdrafts, etc. unsecured debts in Scotland are statute barred after 5 years.

The Act only applies when no contact has been made between the creditor and debtor between the given time period. A local council is entitled to recover any debt as long as it is still due – even if it made an error and closed the account before it was settled.

When the Limitation Period Commences

It is necessary to understand when the time limit commences. As per the Limitation Act, the limitation period starts from the ’cause of action’. However, it is not the same for all types of debts.

Unsecured credit debts

Unsecured credit debts or simple contract debts such as credit cards, store cards, personal loans and catalogues are statute barred after six years.

The cause of action for these is usually when your agreement says the creditor is able to take court action against you. It might be after a default notice has been sent to you and then expired.

After the commencement of  limitation period,  a simple contract debt becomes statute barred only if the following conditions satisfy:

  • Where the creditor has not already started a county court claim for the debt;
  • You have not made a payment towards the debt during the last six years; and
  • You have not written to the creditor, in the last six years, admitting you owe the debt.

If any one of the conditions proves to be contrary, the debt cannot be statute barred.

Once you inform the creditor regarding disputing the debt because of it being statute barred, the burden to prove otherwise falls upon them.

Council tax Debt

A council cannot go to the magistrates’ court and ask for a liability order for council tax which became due more than 6 years earlier, as per the Regulation 34(3) of Council Tax (Administration and Enforcement) Regulations 1992.

The cause of action for council tax is the date the council first sent a bill to you. Unreasonable delays in sending bills could be grounds for making a complaint to the council and then to the Local Government Ombudsman.

When council tax becomes due

A Council Tax charge cannot become due until a Council Tax Demand Notice has been issued by the council, even if it is done so retrospectively. There is no limit on how far back a Demand Notice can be issued and the request can be made for the balance which is due.

Liability Order

In case of council tax arrears, the council has the option to issue a liability debt. The council can apply to the magistrates’ court to get a liability order. This order states that you owe council tax but have not paid it. It allows the council to deduct the Council Tax debt, as well as the court costs from your wages or benefits.

This liability order can be against the person to whom the original bill was sent, or any other person responsible for the payment.

Once a magistrates’ court has made a liability order, there is nothing for the council tax to be statute barred. The council can pursue the council tax arrears for as long as the balance remains due. There may be limits on how the council can enforce old liability orders. Section 9 of the Limitation Act 1980 and Regulation 34 of the Council Tax (Administration and Enforcement) Regulations 1992 both apply to action prior to the granting of a Liability Order by the Magistrates’ Court. In England and Wales, once the Liability Order has been passed by the Magistrates’ court, the debt remains outstanding and enforceable as long as the Local Authority wishes to pursue it. There is no time limit on recovery after this.

After a Liability Order

If the Liability order remains unanswered, there are several actions the councils can take.if you do not pay the required amount, first of all, you can be asked to provide them certain information.

Information Required

The council can ask you to tell them in writing the following:

  • Name and address of your employer;
  • Your actual and expected earning;;
  • Deductions taken or expected to be taken from your salary;
  • Your employer’s contact details, such as his work telephone;;
  • Any other income such as pensions, benefits etc., availed by you;
  • Details if anyone else is also liable for the debt.

The council gives you 14 days to provide them these details. Not responding or providing false information is a criminal offence.

This is the information used by the council to determine how to recover the unpaid council tax.

Bailiffs

Bailiffs or enforcement agents are used by local councils to recover their debt. They must always be ‘certificated’, that is, they must have a certificate from the County Court allowing them to act in the capacity. You can check a bailiffs current certificate from Certificated Bailiff Register

Generally, council tax is collected by a private firm of bailiffs on behalf of your local council. The bailiffs’ purpose is to take your goods away and sell them, at a bid or an auction, to raise money in order to pay the debt. The bailiffs can be instructed to act only once they have got a liability order against you. The process followed by them is called ‘taking control of goods’.

The bailiffs should give you seven clear days’ or working days enforcement notice that they would visit you.

Deductions: from Earnings and Benefits

In order to recover its debt before it becomes statute barred, the council can get several deductions to be applied at the source itself.

The two deductions that a local council does are:

Earnings 

Here, the council gets its debt repaid through your earnings. In this case, the council asks your employer to take regular deductions from your earnings to repay the debt you owe to them. It is called an ‘attachment of earnings order’.

These deductions are made from your ‘net income’ on a sliding scale depending on how much you earn, that is, from income you have left after paying your tax and National Insurance.

However, making deductions from earning through the employer cannot be done if you are self-employed.

Benefits 

Another way to make a deduction is from benefits you are receiving.

If you claim any kind or state or government or any benefits, the council can apply for a third party deduction at the source from those benefits after the liability order.

These benefits include Income Support, Pension Credit, income-related or contribution-based Employment and Support Allowance, income-based or contribution-based Jobseeker’s Allowance or Universal Credit.

The local council can use any or all of the above mentioned deductions to recover its council tax debt, before it becomes statute barred.

When you are not responsible for a debt

The question of a council tax being statute barred or not does not even arise in cases  you don’t even have to pay the debt. 

This happens in the following cases:

  • It has been at least six years since you made a payment or were in contact with the creditor,
  • There was a problem at the time of signing of the agreement, such as the agreement being unclear or vague, or if you have been pressured into signing the agreement,
  • The creditor did not check at the time of making oe signing the agreement whether you could afford paying it back or not,
  • If you were an authorised additional cardholder on someone else’s credit card account

Challenging council tax arrears

Being in council tax arrears means you’ve missed a Council Tax payment, which implies that you owe money to your council.

You might be able to challenge a council tax bill in the following cases:

  • When you don’t think you’re liable for it;
  • If you believe that the property is permanently exempt from council tax, for example if it’s a student halls of residence or armed forces accommodation, or falls under any other exemptions to council tax.
  • If you think that the property is temporarily exempt, such as if it’s been left empty because it’s been repossessed, or someone has died or is in hospital.

Conclusion

This blog answered the question “Can council tax be statute barred?” It covered the limitation period for council tax, limitation period and related rules in general, what happens if you are in council tax debt, before it becomes statute barred, what happens after and such other topics.

FAQs

Can a council tax debt be written off?

Yes, council tax debts can be written off by the respective councils, if they think it fit to do so. However, it rarely occurs.

 

What happens if council tax is not paid?

If your council tax debt is not paid, you are in council tax arrears. You owe money to your council, in which case you need to repay it back as soon as possible.

Can I be chased for a statute barred debt?

No you should not be chased for a statute barred debt. If you are being chased for one, you can challenge it. A creditor cannot enforce a debt after the limitation period has expired.

 

Can you get a CCJ from council tax summons?

No, you cannot get a County Court Judgment (CCJ) from a council tax summons.

 

How long can council tax debts be chased?

Council tax debts in England and Wales can be chased for upto 6 years, while in Scotland, council tax debts can be chased for 20 years.

Citations 

https://www.castlepoint.gov.uk/council-tax-enforcement-faqs/
https://www.nationaldebtline.org/fact-sheet-library/statute-barred-debts-ew/
https://www.nationaldebtline.org/fact-sheet-library/council-tax-arrears-ew/
https://www.nationaldebtline.org/sample-letters/time-has-run-out-recover-debt-ew/
https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-your-debts/check-if-you-have-to-pay-a-debt/
https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx
https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-urgent-debts/dealing-with-council-tax-arrears/
https://www.citizensadvice.org.uk/housing/council-tax/council-tax/
https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-your-debts/check-if-you-have-to-pay-a-debt/
https://www.dealingwithbailiffs.co.uk/CouncilTaxNDRMoreThan6YearsOld.htm
https://www.moneyadvicehub.org.uk/debtipedia/advice-and-information-debtipedia/debt-advice/debt-advice-topics/statute-barred-debts
https://moviecultists.com/does-council-tax-become-statute-barred
https://www.theguardian.com/money/2012/aug/31/chased-10-year-old-council-tax

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.