Limitation on Unpaid Council Tax

Author: Simon Hill
In: Bulletin Published: Tuesday 02 March 2021

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Claims to recover unpaid council tax are subject to a 6 year limitation period contained in the Council Tax (Administration and Enforcement) Regulations 1992 (SI 1992/613), specifically reg.34 (3). Reg 34(3) reads, so far as is relevant:

‘…no application may be instituted in respect of a sum after the period of six years beginning with the day on which it became due under Part V.’

The application for a liabilty order must be made within 6 years starting with the day the council tax became due. Another way of putting this is, as Lloyd LJ said in Bolsover District Council v Ashfield Nominees Ltd [2010] EWCA Civ 1129 [2011] Bus LR 492, at paragraph 1:

‘A liability order is limited to amounts of council tax which became due within the period of six years before the application to the magistrates' court.’

By analogy, this time limit applies to the ability to found a bankruptcy petition or winding up petition on due but unpaid council tax. At paragraph 34, Lloyds LJ said:

‘I accept that, whereas unpaid council tax can rank as a debt for the purposes of the Insolvency Act 1986 even if no liability order has been made, this is subject to the proviso that, if the tax fell due for payment more than six years previously, so that a liability order could no longer be applied for in respect of that sum, it would not be a valid debt for the purposes of insolvency proceedings. That is no more than an application of the 1992 Regulations by analogy.’

It is interesting to note that a similar regulation applies to National Non-Domestic Rates (NNDR or Business Rates), namely, reg.12(3), which reads so far as relevant:

‘…no application may be instituted in respect of a sum after the period of 6 years beginning with the day on which it became due under Part II.’

SIMON HILL © 2021

BARRISTER 

33 BEDFORD ROW  

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