More than half of councils are now using ‘charging orders’ to recover unpaid council tax, new research has revealed.
A freedom of information request by accountancy firm Moore Stephens found 54% of local authorities are now targeting debtors’ homes as a way of recovering unpaid taxes.
Charging orders allow councils to receive a payment for outstanding council tax when a debtor’s property is sold or re-mortgaged.
The FOI request showed around 4,500 charging orders were issued to councils in the past year, up from 4,300 the previous year.
However, the number of bankruptcy orders issued to councils has fallen to 1,726 in 2015/16 from 2,487 in 2014/15. Moore Stephens said this was because it was increasingly difficult for councils to pursue the bankruptcy route as the minimum debt threshold has been raised from £750 to £5,000.
Michael Finch, partner at Moore Stephens, said: ‘Councils are acutely aware that they have a fine line to walk between being assertive enough in dealing with serial debtors who are deliberately avoiding paying, and not being too heavy-handed with honest taxpayers who are in genuine financial difficulties.
‘Securing council tax debts against people’s homes is now local authorities’ main option for pursuing unpaid taxes, especially as bankruptcy has become harder to secure, but there’s a risk that by going down this route, they may never see a penny in repayments.’
Figures show that councils were owed £2.7bn in unpaid council tax bills in 2015/16.
