Council tax court summons for debt included in an IVA

Adrian1212

I’ll explain this the best that I can but it’s a bit of a mess really! 

Completed and had an IVA accepted 8 months ago.. this IVA included £1800 debt of council tax.

No further letters and I thought everything was going well until I received a court summons for the magistrate courts from council tax. 

Since the IVA I have paid my council tax on time every month! 

I called them and they said that they were not aware of my IVA (despite my IVA practitioner confirming by email that they were alerted of it last year). 8 months ago I also sent an email to council tax with details of my IVA.

So all the payments I have been giving them for 8 months they have been taking off my debt from last year which was included in the IVA! 

I called them and they refused to stop the court summons. Their advice was to send them a copy of the IVA which they will take up to 30 days before they view it and they recommended that I don’t attend the court hearing and let it go forward in my absence.

I am honestly so worried here and honestly don’t know what to do! Can anyone please advise me? 

sourcrates

One of the few benefits of an IVA is that it affords you legal protection from further action by your creditors.

You should inform your IP immediately about this.

Legal protection means that they can`t apply for a CCJ or a liability order, if they do, and its granted, your IVA will annul it, you will be present on the insolvency register showing a current IVA, they don`t have a leg to stand on.

You need to stop talking to the council, put your complaint as clearly as possible in writing, inform them of the IVA, and let them sort it out, as sort it out they must, they now have a legal duty to do so.

Don`t panic, they are in the wrong, not you.

Adrian1212

sourcrates said:

One of the few benefits of an IVA is that it affords you legal protection from further action by your creditors.

You should inform your IP immediately about this.

Legal protection means that they can`t apply for a CCJ or a liability order, if they do, and its granted, your IVA will annul it, you will be present on the insolvency register showing a current IVA, they don`t have a leg to stand on.

You need to stop talking to the council, put your complaint as clearly as possible in writing, inform them of the IVA, and let them sort it out, as sort it out they must, they now have a legal duty to do so.

Don`t panic, they are in the wrong, not you.

Thank you I really appreciate the advice.

I let my IP know and they said I had to contact the council and request a statement of what they have been using my payments for and to request that they suspend the court hearing.

The council refused to suspend the court hearing and said it will take them up to 30 days just to view my email and the court summons is in 2 days.

Should I show up to the court hearing and try and fight my case? 

From my understanding if the court hearing goes ahead in 2 days without my presence a liability order will be issued.

As said just not sure if to show up at the hearing or not. The council recommended that I don’t but in all honesty that sounded more like for their own benefit than mine! 

fatbelly

The position is clear with council tax debt in a DRO from guidance:

In order to include present year debt, you must have lost the right to pay in instalments

The position is clear with council tax debt in bankruptcy from court case Kaye v South Oxfordshire (2013):

The whole present year's tax is automatically included 

My recollection is that that case also set precedent for IVAs.

Adrian1212

fatbelly said:

The position is clear with council tax debt in a DRO from guidance:

In order to include present year debt, you must have lost the right to pay in instalments

The position is clear with council tax debt in bankruptcy from court case Kaye v South Oxfordshire (2013):

The whole present year's tax is automatically included 

My recollection is that that case also set precedent for IVAs.

Sorry just struggling to understand what this actually means.

Does this mean that my IVA should never have included my council tax debt? 

Thanks!

ManyWays

Completed and had an IVA accepted 8 months ago.. this IVA included £1800 debt of council tax.
but that council tax debt was from previous years, not this year, correct?

Since the IVA I have paid my council tax on time every month! 
which is why you have been paying this years

So the problem here is you are being taken to court for a debt which was not included in your IVA, because the council incorrectly has been taking your payments against a debt that was in the IVA and so you are in arrears.

I doubt that there is any direct legal protection for this from the IVA

Very few people turn up to dispute Liability orders.  If you do, your case is that you have been making payments to it and the council has incorrectly allocated them so you are not actually in arrears.

if you end up with a LO, go to your local Citizens Advice and ask for their help

fatbelly

Adrian1212 said:

fatbelly said:

The position is clear with council tax debt in a DRO from guidance:

In order to include present year debt, you must have lost the right to pay in instalments

The position is clear with council tax debt in bankruptcy from court case Kaye v South Oxfordshire (2013):

The whole present year's tax is automatically included 

My recollection is that that case also set precedent for IVAs.

Sorry just struggling to understand what this actually means.

Does this mean that my IVA should never have included my council tax debt? 

Thanks!

The whole present year's tax is automatically included 

I don't know how to say that more clearly.

If you can understand sourcrates post, I am just giving the legal basis for what he said

EssexHebridean

@fatbelly - if the IVA was 8 months ago, does that mean that the arrears - ie the £1800 debt - AND the whole of the 2024/25 year’s bill would have been included then? (As in May 2024 the “present year” would be the CT year we are still in, no?) Apologies if I’m missing something obvious, but for someone with little knowledge in this area, it’s not entirely clear to me. 

ManyWays

fatbelly said:

The whole present year's tax is automatically included 

The whole present year's tax is automatically included

I don't know how to say that more clearly.

If you can understand sourcrates post, I am just giving the legal basis for what he said

Is that right? I thought Kaye v South Oxfordshire only applies when there were arrears on the current year? it seems unlikely that every contingent liability has to be listed

What would happen if you had arrears from 5 years ago and none since, would the current year be included?

What about if you had never had council tax arrears, surely you wouldnt have to list the current years council tax? 

sourcrates

It`s my understanding that the full years CT can be included in any insolvency, arrears or not, the ruling is here:

"Judge Hodge QC also confirmed that his decision would be applicable to company liquidations AND also for personal bankruptcies (which will include IVA's and Debt Relief Orders).

The Insolvency Service have confirmed today that they will be now be issuing a notice confirming that a council tax/non domestic “holiday” will now be able to be included as a debt in ANY form of insolvency 

This will mean that any individual or company declaring insolvency on or after 1st April 2014 will be able to include the ENTIRE year’s council tax /non domestic rates as a debt".

ManyWays

There are no options to leave any debts out of a bankruptcy so that isnt relevant. I suspect company liquidation is the same.
But not all debts have to be listed in an IVA and it sounds as though the current year was not listed in this case.  
One option would be to amend the IVA to include the current years debts.