Breathing Space FAQs - What constitutes “arrears” in relation to council tax and business rates?
Question 7: What constitutes “arrears” in relation to council tax and business rates?
ANSWER
Reg 5 (4) – In these Regulations “non-eligible debt” means-
(k) any liability in respect of council tax for a financial year, except where-
all the instalments for that year have fallen due and any of those instalments has not been paid, or
a reminder notice has been served on the debtor under regulation 23(1) of the Council Tax (Administration and Enforcement) Regulations 1992.
(l) any liability in respect of non-domestic rates for a financial year, except where –
all the instalments for that year have fallen due and any of those instalments has not been paid, or
a further notice has been served on the debtor under regulation 8(1) of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989.
Page 7 of the guidance for creditors states:
Excluded debts –
council tax liabilities have not yet fallen due. If all instalments for that financial year have fallen due and have not been paid, these are considered to be a qualifying debt. If a debtor has been served with a “reminder notice” to pay a council tax bill, the remaining liability for the financial year is a qualifying debt.
An eligible non-domestic rate debt (or business rates) is a qualifying debt if all instalments for that financial year have fallen due and have not been paid. If a debtor has been served with a “further notice”, the remaining liability for that financial year is a qualifying debt.
This doesn’t account for the fact that bills can be issued for current financial year from January with only one instalment due, or a breathing space could come into effect the day after a final instalment falls due.
There is usually a couple of weeks minimum allowed, in practice, between an instalment falling due and a reminder being issued, so does this mean that the debt falls under (k)(i) or (l)(i) the day immediately after the instalment due date? It is open to be interpreted that way.
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