Council tax pilot to recover debts direct from workers’ wages

25 July 2019


We recently told you about a pilot scheme affecting some local authorities in England who are using information-sharing powers to recover unpaid council tax debt directly from earnings.


Although we knew that this was a Cabinet Office pilot involving the sharing of HMRC data, detailed information has been scarce and there has been much industry speculation about the project and the implications it will have for payroll and payroll software providers.


Since our initial reports, representatives from the CIPP and ICAEW were invited to discuss this pilot with Cabinet Office representatives and we are now able to share details about the project.


The Digital Economy Act (2017) allows permissive data sharing between specified public authorities for the purpose of managing and reducing debt.  Currently, councils can only use data supplied by the resident to recover their debts.  In this pilot, 29 councils are able to obtain HMRC employer and self-assessment data for a sample of residents who have not paid their council tax.


The pilot only affects people who have not paid their council tax for 2018-19 or earlier years and the council has obtained a Liability Order from the Magistrates Court.  Each council in the pilot will supply HMRC with a title, forename, initial or middle name, surname, debt address or contact address for around 4,000 debtors to obtain employment and self-assessment information. HMRC will use the council supplied information and compare those details against their internal records. Where there is an exact match with the first name and surname and either debt or contact address, HMRC will provide requested details back to the council.  Where the data is matched, the council will contact the individuals concerned to decide how best to recover the debt.  It may be that the council decides to raise a Council Tax Attachment of Earnings Order (CTAEO) in order to enforce the payment of Council Tax against employed debtors.


Whilst it is likely that there will be an increase in the number of CTAEO's issued in pilot areas, this is the only change that payroll practitioners are expected to face.  There are no new fields required on RTI submissions and this pilot does not involve the creation of a new type of AEO.


The pilot will run for one year, after which time it will be evaluated and a report produced for the Review Board and Minister for the Constitution.   Factors determining whether the pilot is a success could include:


  • Amount of council tax debt recovered in an affordable and sustainable way
  • Increase in the number of vulnerable customers identified
  • A reduction in the use of enforcement agents

If the pilot is successful, a national solution for all England and Welsh councils may be developed. 
The CIPP is keen to understand whether payroll practitioners in the pilot areas experience an increase in the number of CTAEO's received and whether they experience any additional administrative burden if that proves to be the case.  We will be liaising with the Cabinet Office to ensure this area is explored.