Regentford Ltd v Thanet District Council

Under the council tax statutory scheme, liability to pay is distinct from the actual duty to pay. The duty arises when the billing authority serves a demand notice, not when it sets the annual council tax. The six-year period for applying for a liability order therefore begins when the sum becomes due following demand. A failure to serve a demand notice as soon as practicable does not invariably confer a windfall on the liable person. It may prevent recovery where the breach causes procedural or substantive prejudice. A defendant who allowed liability-order proceedings to proceed by default could not raise that new defence on a case-stated appeal.

Thanet District Council obtained liability orders from the Thanet Justices against Regentford Ltd for council tax relating to two properties and several financial years. The Justices accepted that the application included sums allegedly due more than six years earlier, but stated that they had acted wrongly and in excess of jurisdiction.

The appeal concerned whether council tax for 1996–97 became due when the Council set the amount on 22 February 1996, or when demand notices were served on 2 October 2002. A further issue was whether alleged non-compliance with the statutory timetable for serving demand notices justified remitting the case so that Regentford could raise a prejudice-based defence.

1. Appeal by case stated allowed in substance. The case stated was amended to identify the real issue. The Council’s liability orders were valid and enforceable.
2. Under the Local Government Finance Act 1992 and the Council Tax (Administration and Enforcement) Regulations 1992, setting the annual amount creates potential liability, but does not itself create an actual duty to pay. Regulation 18 requires a demand notice to be served on every liable person, and regulation 20 governs payments on account. Service of the demand makes the amount demanded due and payable.
3. The six-year period in regulation 34(3) consequently begins when the sum becomes due under Part V, following service of the demand notice. The council tax in question became due on 2 October 2002, so the Justices had jurisdiction to make the liability orders. The court drew an analogy with the ordinary liability of a guarantor, whose potential exposure becomes an actual duty upon demand.
4. Regulations 18 and 19 impose a statutory duty to serve a demand notice on or as soon as practicable after the authority first sets the relevant council tax. The duty protects liable persons by enabling them to investigate liability, preserve evidence and arrange payment. However, the wording of regulation 19 permits the view that breach does not invariably produce a windfall for the liable person. It may preclude recovery where the breach causes procedural or substantive prejudice.
5. Encon Insulation Ltd v Nottingham City Council [1999] RA 382 was distinguishable because the wording of the relevant non-domestic-rating regulation was stronger. Regentford had not attended the hearing before the Justices and had not raised its alleged prejudice there. Following LCC v Farren [1956] 1 WLR 1297, the court refused to remit the case to permit that new defence to be raised.

• High Court (Administrative Court): on an appeal by case stated, amended the question, held that the council tax became due on 2 October 2002, and upheld the Justices’ liability orders.
• Thanet Justices: made liability orders against Regentford Ltd and stated that they had acted wrongly and in excess of jurisdiction because the application allegedly included sums due more than six years earlier.