Securing discretionary reduction of Council Tax for clients facing financial hardship
What is the problem?
Until 2012 people dependent on means tested benefits or other very low incomes did not have to pay any Council Tax(CT). They could apply for a national Council Tax Reduction scheme that reduced their CT liability, often to zero; but in 2012 the government devolved responsibility for Council Tax Reduction to local authorities and reduced the funds available for their schemes. As a result from 2016 the Conservative led Richmond Council imposed a minimum CT charge on all residents in the borough except pensioners and those receiving very specific disability benefits. This had a devastating effect on the poorest residents in the borough. As benefit rates had not been increased to cope with rising prices since 2016 the poorest residents were already struggling to pay for basic living expenses with no money left for Council Tax.
What have we done to tackle it?
Our main response was to campaign vigorously for any minimum CT charge to be removed from the poorest residents of the borough. This campaign has now been successful following the council elections in 2018 and the transfer of control to the Lib Dems who have scrapped the minimum CT charge for 2019/20. (For details see Persuading the council to remove the minimum Council Tax contribution for low-income households
However, in addition to this campaign from 2017 onwards we began to encourage and support clients facing severe financial hardship to apply to the Council for Council Tax Discretionary Reduction under legislation passed in 1992 but strengthened in 2012.This legislation gives local authorities discretion to reduce any tax payer’s CT liability, even to zero, if there is sufficient evidence of financial hardship to justify it. Local authorities are required to respond to applications within 8 weeks, and applicants can appeal to a Valuation Tribunal for a decision if this deadline is missed. Applicants can ask councils that reject their applications to reconsider their decisions and, if the rejection is confirmed, can appeal to a Valuation Tribunal, who can impose its own decision, overruling the council.
Resistance from the Conservative-led Council between 2017 and 2018
The Council has not dealt with these applications correctly. Either there has been no response to the applications, triggering appeals to a Valuation Tribunal, or they have been rejected without consideration of our clients’ financial circumstances on the grounds that it was not the Council’s job to reconsider the level of means tested benefits that the government considered sufficient for essential living expenses. For various reasons appeals to the Valuation Tribunal were held up for several months.
A new approach from the LibDem Council in 2018
The Lib Dem Council has recognised that despite the removal of the minimum CT charge some residents on low incomes have incurred substantial CT arrears due to the imposition of the charge in the past. So the Council has decided to establish a fund to be used to reduce or write off these residents’ CT arrears if a strong enough case can be made, but with the intention of avoiding any of these cases being appealed to, or decided by, a Valuation Tribunal. Where this fund is used to respond to an application, the Council stresses that the financial settlement is not connected with the legal process so that it cannot be challenged by an appeal to a Valuation Tribunal.
Our response to the Council’s new approach
We are continuing to advise and help clients facing severe financial hardship to apply to the Council for Council Tax Discretionary Reduction, which is their legal right. We still need to persuade the Council to respond to these applications, so that the need to appeal can be avoided. With the help of a free Advocate we are pursuing appeals to a Valuation Tribunal where we need to. At our first hearing we scored a notable success, but there are always long delays before appeals reach a hearing and most appeals are resolved in the meantime. In addition since the Lib Dem Council removed any CT charge for residents on very low incomes far fewer clients now face financial hardship because of their Council Tax.