Liability Order – what is it and how to challenge it

Did you know that a local authority, otherwise known as (‘Council’) can take legal steps to recover arrears of council tax and national non-domestic rates if they remain unpaid, with no payment plan in place and/or no communication from the debtor?

The local authority should have exhausted all forms of communication before seeking a court order known as a ‘Liability Order’ issued by the Magistrates’ court.

Usually, the Council will issue reminder notices and then a final notice requesting payment in full.

If this fails and payment remains outstanding with no communication from the payee, the Council will then make an application to the Magistrate’s court seeking a liability order against the person or business who is in arrears.

The Magistrate’s court will then issue a ‘Summons’ – this is a notice informing the debtor that a hearing will be taking place. The debtor is required to attend and put forward a defence and if they do not attend, then the hearing will continue. Most likely, the Council will be granted the liability order.

Once the Council are granted this, they can and usually do instruct bailiffs to attend the property to collect the money outstanding – this is commonly referred to as enforcement.

The Council have the following enforcement remedies available to them once a liability order is granted:

• Payment orders
• Attachment of earnings orders
• Seizure and sale of goods following the issue of a warrant
• Obtaining a charging order against the debtor's property
• Insolvency proceedings such as bankruptcy of an individual or liquidation of a business
• Imprisonment

A liability order can be set aside, however there is a strict criteria to meet, one of them being that the application to set aside the liability order must be made promptly. This has been defined by case law as days or weeks but not months or years.

When putting forward an application for set aside, there must be a genuine dispute as to the liability and a dispute to the valuation of the property is not a valid defence.

The council will have the opportunity to challenge the application to set aside, however in some cases, if they feel the criteria has been met, then they have the power to quash the liability order or reduce the sum owed.

If a liability order has been made against you or your business and you are unsure of your next steps or would like to set aside the order, then contact our specialist team on 0116 208 1495.