council tax and bankruptcy ruling, makes clear rulings on liabilitys periods

[Crazy council]

It probebly on here allready but i was doing some research earler and ended up reading through this,,

http://www.bailii.org/ew/cases/EWHC/Ch/2013/4165.html

It makes some very clear rulings about how the chargeable council tax and business rates year is counted around bankruptcy and IVAs, ICAs company liquidations... especially in relation to the remaining part of the year after the action. If i have read it correctly, best time of year to be bankrupted or in IVA or arrangement for a company, will be just after april, As all CT and NNDR debts for the full financial year would be debts within the creditors/arrangements.

Therefore if done in april/may, you get the full rest of the financial year before the council gets a go at you or your business again. And if your trying to trade/pay your way out of the debts/situation. This could be welcome relief and give you a bit of room....

[Wombats]

Re: council tax and bankruptcy ruling, makes clear rulings on liabilitys periods

There's a really good summary of this identifying key points here:

http://bailiffadviceonline.co.uk/unc...lvency-schemes

[Crazy council]

Re: council tax and bankruptcy ruling, makes clear rulings on liabilitys periods

Hi

just adding to what i have been looking at this case for and some problems i can forsee around councils taking Bankruptcy actions on this.

Straight to the Problem i see

Councils could use this legislation to become 1st creditor in a personal bankruptcy, ( they tried doping this to me in 2007, with a differnt method ). In most circumstances, this would not be a problem, but if the council are the ones that have made the person bankrupt, and if its been done because you have other issues with them ( happened to me ).

I wander if there will be anymore case law on this, defining what level the council could be held as a creditor during the creditors meeting, during the financial year for nndr.

Imaging this.

Your made bankrupt April - july one year. In that year you have NNDR on a business premiss. If at any point in that year you stop your business, that obviously changes the amount claimed by the council creditor. But, because NNDR can be massive chunk ( say 10k per year or more ) i wander if this give the council as a creditor, an unfair advantage as they could use this to ensure they are more than 25% of the total debt ( gives them more control in the process ).

Hence, in the above situation, what if the extra claimed innitialy on NNDR, is reduced after the councils claimk >25% creditor status or lead creditor. And then, after the NNDr is not due ( business closes ), the amount puts the council as less than 25% or not lead creditor.

I had BK action by the council in 2007, and lots fo the rules and regs changes in 2009-10, due to some important caselaws arrounds costs and action ( it helpped me ), so am not sure if the next part would still be relevent.

But i wander how the NNDR charges, or indead CT charges, would be considered in relation to assist left for the bankrupt after all claims and costs ( this was my position ). Because all the costs claims and creditors worst case scenario, still left me with substantial asset, i still had quite a say in the administration ( fought and won after 6 years ).

Say all costs and creditors = 20K, ( inc 10k nndr )
other creditors under 5k each

Then, your house worth 100k, outstanding Mortgage and projected sales costs total 80k ( leaving 20K asset ) ( mortgage co not part of BA )
( Not my Curcs, just example figures )
With the NNDR you asset is nothing, council are lead creditor, you get little say
With NNDR extra removed ( say 5K ), you would have assit and have a say, and also you may be the biggest creditor due from your estate.

Although my BK spanned the changes, the creditors parts were 2007, so i dont know if the updates in 2009-10 in relation to trustees and ORs, addresses this.

Am only thinking of this as an interesting point in law, spawning out of some action i am taking against my council.. But it does make a substantial affect on the rights of the BK in relation to administration of your estate ( or did in 2007 ) IE, coukld the council use it to bully the action more to there favour.

For instance. My BK, was, what ended out being, the current years NNDR and CT only. ( claimed 9k first, stat demand for 6k, claimed at court BK £ 3100, then sent to IP 4500 , then later adjusted to £ 2500 ). Only other creditor was my bank ( never behind, not involved in BA, just 1500 overdraft, and £ 3k on personal business card ).

I had told my council i had no debts apart from just over £ 3k with my bank, wislt trying to sort it out with them ( like a fool ). Thats why i suspect they upped it to 4500 to the IP, to be lead creditor. they only reduced it to 2500 after the trustee evicted me from my property ( march 2011 , month after ). ( won back feb 14th 2013 ( day before my birthday )).

The council tried to pick a local solisior that does work for the council as the IP/administrator. the OR on behalf of my bank ( lead creditor by about £ 200 ) picked PWC. ( massive fight, another story ). But the council argued for there IP at the OR meeting ( 2007 ).

So, back to the point, i am concerned that the above rulings, although fabulous for anyone going into BK or IVAs ect with large debts, It also opens a hole for councils to potentially abuse the system against people with smaller debts that they are trying to manage. by minipluating the claim arround NNDR to become controling creditor. ( Consider i state, i dont know what changes the 2009-10s would have affect around this sinario ).

[Nibbler]

Re: council tax and bankruptcy ruling, makes clear rulings on liabilitys periods

Interestingly it is supposedly the case that that ruling does not apply to council tax debt in a Debt Relief Order, due to some technical difference in the definition or a qualifying debt compared to bankruptcy or other insolvency.

i.e. the years CT would only qualify where: the full amount becomes payable under the council tax regulations - usually 2 missed instalments.

The Insolvency Service DRO unit have been changing their minds on this since the ruling, doing a yes - no - yes - no - maybe act.

If I can tease the details out I will post them.

[Crazy council]

Re: council tax and bankruptcy ruling, makes clear rulings on liabilitys periods

Interestingly it is supposedly the case that that ruling does not apply to council tax debt in a Debt Relief Order, due to some technical difference in the definition or a qualifying debt compared to bankruptcy or other insolvency.

i.e. the years CT would only qualify where: the full amount becomes payable under the council tax regulations - usually 2 missed instalments.

The Insolvency Service DRO unit have been changing their minds on this since the ruling, doing a yes - no - yes - no - maybe act.

interesting that, the ruling is prity thoughogh, and says the full amount becomes due as a financial asset after 1st APR, and they offer of instalments is only an offer.

I would imaging that councils legal dept might try and push the OR into treating it differently, but as it stands, i think it should be included, no question. As it becomes an asset ( debt ) in full, 1st Apr.

[Nibbler]

Re: council tax and bankruptcy ruling, makes clear rulings on liabilitys periods

Yes, Councils have been challenging it regarding DROs, forcing the Insolvency Service DRO unit to take detailed legal advice.

The ruling was actually saying that the CT was a contingent liability, which is covered by bankruptcy.

The preliminary legal argument I've seen is that the wording of the DRO legislation does not cover those in the same way that bankruptcy does. Hence the ruling does not apply.

(personally I think the argument is complete tosh, but if the IS go with it then it may need a formal challenge to budge them)

Hopefully I can get hold of the more recent and final advice sometime soon.

[Crazy council]

Re: council tax and bankruptcy ruling, makes clear rulings on liabilitys periods

Council Legal Depts,

Honestly, one day the legal system has to wake up to them @#?=S , the ORs office are pretty good though, i can not see any way around that judgment on the councils behalf.

I wander if the council have been challenging it on both CT and NNDR, NNDR, sort of makes some sense to challenge, but not CT