£15.1m in council tax and business rates debt written off

  • 5 September 2013
  • From the section Wales
Image caption Cardiff council wrote off £1.2 million in council tax compared with £804,000 in Wrexham

Councils in Wales wrote-off £8.5m in business rates and £6.6m in council tax debt in the last financial year, BBC Wales has learned.

In all, councils wrote-off over 32,000 individual council tax debts and over 3,000 individual business rate debts.

The Welsh Local Government Association said the 22 Welsh councils had a good record, with a collection rate of 97%.

But the TaxPayers' Alliance said councils "cannot afford to leave so much cash uncollected".

The figures vary from Cardiff council writing off £3.3m between the two taxes to Pembrokeshire writing off around £139,000.

Swansea council said that the main reasons for write-offs were debtors being made bankrupt or having been liquidated, being unable to trace debtors, disputed liabilities and situations where it was not cost effective to pursue very low value debts.

The information was obtained in a Freedom of Information request by BBC Wales' Newyddion Ar-lein.

'More effective'

Councillor Aaron Shotton, Welsh Local Government Association spokesperson for finance and resources, said: "Every year councils in Wales collect nearly £2bn in council tax and business rates.

"Councils in Wales have a good record in respect of debt collection and recovery rates, with 'in-year' collection rate for both of these taxes averaging approximately 97% (and this figure has remained stable)."

Mr Shotton said that over time in excess of 98.5% of all debt was collected, and claimed that compared to taxes collected by central government, local government was "a lot more effective in doing its job".

He added: "Recent analysis by the Local Government Association in London shows that tax left uncollected by HM Revenue and Customs (HMRC) amounts to around £40bn, costing the equivalent of £1,370 for every household in England and Wales.

"If HMRC was to increase its collection rates to be at least as effective as local government it would bring in an additional £20bn to the Exchequer".

'Tax gap'

An HMRC spokesperson responded: "The LGA have fundamentally misunderstood the nature of the tax gap which is not a measure of tax unpaid.

"In fact HMRC already collects 99% of all taxes and duties which are collectable from a very wide customer base of 60 million taxpayers, increasing our tax take by £1.4bn to £475.6bn in the last year alone. On average we collect £1.3bn a day for the UK."

A Cardiff council spokesperson said: "The figure of £1.2m written off for council tax and £2.1m for business rates in 2012/13 is less than 1.5% of the monies we billed for during that year.

"As the capital city of Wales we are collecting over 98.5% of the amount of council tax and business rates that are billed in the city.

"Before writing off a payment, many of these debts are subject to court proceedings for non payment and bailiffs are widely used to help collect the tax.

"Writing off a debt is always the last resort for the council when all avenues have been explored including using tracing agents and insolvency action."

Robert Oxley, campaign director of the TaxPayers' Alliance, said: "Council chiefs should make it easier for those struggling by keeping taxes low and making it easier to pay while pursuing those who wilfully avoid settling their bill".

In the previous financial year, 2011-12, Welsh authorities failed to collect £15m in council tax and business rates..

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