Incasso LLP has forged a number of dynamic partnerships with Local Authorities in recent years and therefore understands the obstacles which must be overcome in order to achieve their performance targets. 

The Incasso Debt Assessment/E-value report was developed with this in mind, to quickly and efficiently identify debtors profile, ensuring that debts are channelled towards the most effective enforcement strategy possible.  To demonstrate how Local Authorities are finding this a useful tool in order to recover Council Tax and Business Rates, the following case-study was compiled with the co-operation of Unity Partnership.

The multi-faceted regeneration of Oldham Borough is underpinned by the key objectives of improving services, community cohesion, economic regeneration, quality of life, and establishing Oldham as a key town within the region.  To help achieve these aims the council established Unity Partnership, an innovative joint venture partnership between Mouchel, Agilisys and Oldham Council. Founded in May 2007 and employing more than 400 professionals, Unity Partnership delivers property, highways & engineering, ICT, and customer and exchequer services.

The exchequer team play a crucial role in helping to collect income for the Council and they decided to investigate the use of a third party in order to assist and increase the collection rates for Council Tax and Business Rates debt.

Unity Partnership's Senior Bailiff, Nick Davies says of their previous collections activity: "Generally, this type of debtor would have received several visits from Oldham Council's Bailiff's and in some cases, referred to external Bailiff's in order to recover monies due.  Alternatively, an Information Request would have been sent once a Liability Order was granted, requesting income details, which would then enable us to deduct from their earnings/benefits.  If this was unsuccessful, a Non Compliance Summons would be issued through the Magistrates Court".

On learning of the Incasso Debt Assessment/E-value report, the Unity Partnership believed that not only would the report assist with their internal resource, as the trace and investigation work would be carried out in-house by Incasso, but it would also be a major consideration in their next course of recovery action.

As the E-value report focuses on key data such as debtor homeownership status, property valuation and debtor's financial details, the Unity Partnership believed that this would help them determine if the debtor was the property owner with sufficient equity to recover the debt. 

Nick stated: "We find the conclusive report provided by Incasso to be very beneficial and it is one of the main deciding factors in us deciding the best course of action for each debtor.  For the majority of cases, we have agreed with the recovery recommendations provided by Incasso and followed either an Insolvency or Charging Order route in order to recover monies due and we will continue to do so in the future".

Our data indicates that by issuing Insolvency proceedings, 75% of selected cases are recovered in full, including costs, either before or just after a bankruptcy or winding up order is obtained.  It also shows that Charging Orders and Orders for Sale can provide recovery rates as high as 90%, with less than 1% of cases progressing to possession and sale.

£500k Council Tax collected for Enfield Borough Council

In this case study we look at how charging orders raised £500,000 in unpaid Council Tax for Enfield Borough Council last year.

The story begins a few years ago when the council predominantly used bailiffs as its main remedy to collect arrears of council tax. The council’s Head of Collection, Geoff Waterton, recalled: “It wasn’t particularly effective because, in many cases, people had lost their fear of a visit from bailiffs. They collected some money for us but we wondered if we could do better if we tried other methods.” Step forward Incasso LLP, who came up with the idea of applying for charging orders and, to crack the toughest nuts on Enfield’s casebooks, to follow up selected ones with an application for an order for sale.

The thinking behind the initiative was simple, as Geoff explained. “Some people were living in valuable properties but they were resisting all our attempts to persuade them to pay their arrears, which often ran into thousands of pounds.  We decided to target owner occupier cases, where it was clear that people were not unable but fundamentally unwilling to pay.” Enfield Council’s recovery process suddenly got harder. After all, if you are going to crack a tough nut, you need to be forceful.

So, with political backing from Enfield’s councillors, Geoff got Incasso LLP on the case. The process leading up to a possible order for sale is one which needs to be followed to the letter.  First there is an application to the county court for an interim charging order. The application contains information on the debtor, their current address, copies of outstanding liability orders and office copies of HM Land Registry documents as evidence that the property is owned by the debtor.

In most cases, after an interim order has been granted, there is a further hearing to ask the court to make a final or absolute order. In theory, this doesn’t compel the debtor to pay, unless they sell or remortgage. “But, in practice,” said Geoff, “the imposition charging order has been shown to have an important psychological effect. People who haven’t paid us anything for years have started to pay off their arrears.”

In the last year alone, Incasso LLP has handled 320 of these cases, prompting payments of unpaid Council Tax of £500,000. “If we had simply stayed with the bailiff route, I don’t think we would have brought in more than £200,000,” said Geoff. “By obtaining a charge, we were securing the debt against the property and, for those cases where Incasso LLP have applied for a forced sale, I’m delighted to say that the county court gave judgment in our favour each time and we haven’t had to sell a single property. The threat of the enforced sale was enough to get people to pay in full, including all our costs as well.” Among the cases that Incasso LLP has pursued was one involving a £500,000 property where the owner had racked up £12,000 in unpaid Council Tax. The property was finally remortgaged and the debt - and costs - paid. These methods have proved so successful that Enfield is now lowering the bar when it seeks orders for sale.

This has dropped to £5,000 in unpaid council tax - but the formula continues to be a winning one.