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Council Tax debtBreathing Space‘ is the name of the proposed new government initiative to assist those who have debts to be able to discuss those debts with a debt management agency and, where appropriate, enter a debt management scheme for those debts.

In June 2019 the government, having previously issued a consultation document, published an outline plan of how the new system would work in practice. For the purposes of council tax collection and enforcement this proposal would introduce some key changes in how the council tax system is currently implemented.

60 day freeze on recovery action

It is proposed by the government that, from the date of application to a breathing space authorised debt management agency, the council will have to free action on the debt which has been identified in the application. This would be undertaken for a period of up to 60 days (to be reviewed after the first 30 days). Where a person is deemed to have mental health issues then, in defined cases, the freeze may be made for an indefinite period. This freeze on action would include any council tax monies which have become due up to the date of the application but would not include any council tax liability which has not yet become due.

For example, it appears the system would work like this,

A council tax instalment is due on 01 April 2020 of £100.00 followed by 9 monthly instalments of £100.00 (£1000 in total)

The first council tax payment of £100.00 is not made.

If a ‘breathing space’ application is made before the reminder notice is issued then the application will only apply to the £100.00.

If a ‘breathing space’ application is made after the reminder notice is issued but within the initial 7 day payment threshold the application will only apply to the £100.00.

If a ‘breathing space’ application is made after the reminder notice is issued and after the initial 7 day payment threshold the application will apply to the £1000.00 as the full balance has become due.

Whilst any council tax debt is frozen for the 60 days the local authority would be unable to initiate or continue any enforcement action in respect of the balance included in the ‘breathing space’ application. This means that they local authority would have to suspend any action they are taking, although their is a specified intention that there will be exceptions to this general rule.

Any council tax existing enforcement, with the exception of an attachment of earnings, would have to be paused. No new attachment of benefit/earnings orders can be issued for the debt

No new application for a liability order could be made however existing applications could continue to judgement (presumably this would allow a summons which had already been issued to proceed to a liability order).

During the 60 day period the authorised debt management agency would be able to either make an application for a formal debt management plan, come to an arrangement with the council or terminate the breathing space period. If nothing is in place at the termination of the period then it appears that the council may continue any action as usual.

Split council tax debts

What is apparent from the outlined proposal is that the ongoing council tax debt is not subject to the breathing space application and so there will be cases where an application is made before the whole year’s balance has become due. This would mean that the council tax debt from the date of the application onwards is not covered by the breathing space scheme and so action will be to continue on this remaining amount. How this will be managed in practical terms by councils is yet to be seen.


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