Liability question

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    Peter Barker

    This is one for a Revenues geek. It is making my brain hurt.

    The tenant has SMI, and the dwelling would be exempt if she were the only resident. But she has a partner with NRPF. He is not a joint tenant.

    If they were the other way round (if he were the tenant with an SMI partner), he would be solely liable with a 25% discount by virtue of s9(2) of the LGFA 1992.

    If she were a student, he would be a “relevant person” and the dwelling would be exempt.

    I’m leaning towards both of them being liable jointly, because the dwelling is not exempt and s9(2) does not apply. But this goes against all my instincts that tell me an SMI person cannot have joint liability.

    What do you reckon? Reason I need to know is:

    – if he is liable and she is not, there will be 75% liability but no entitlement to CTR
    – if she is liable, and claims CTR, there is a potential public funds issue for him when he applies for his leave to be extended

    Julian Hobson

    Hi Peter

    Park SMI for a moment.

    A couple in this situation are J&S liable for CT regardless of his NRPF status by virtue of s9(1) and (3) LGFA 1992.

    At a point in time she successfully claims SMI because she is Severely Mentally Impaired (not ill) which means that she does not and cannot function socially.

    She cannot be held to have a CT liability by virtue of s9(2) – it is though questionable as to whether she meets the SMI test in reality as in my experience doctors confuse Impiarement with Illness and they are not the same thing and have different legal definitions. It might not be beneficial for her to be SMI in this situation ?

    However if she is SMI then he has to accept CT liability alone and NO CTR as you say.
    If she is liable because she doesn’t have SMI then again there i a potential public funds issue.

    However he can apply for a discretionary s13A(1)(c) reduction because that is not public funds.Such a reduction is not “reduction under a local authority’s scheme” which is how the public fund exclusion is set out in the immigration rules (unless they have arbitrarily changed that -worth checking).

    • This reply was modified 2 months, 2 weeks ago by Julian Hobson.
    Julian Hobson

    (h) a council tax reduction under a council tax reduction scheme made under section 13A of the Local Government Finance Act 1992 (in relation to England or Wales) or a council tax reduction pursuant to the Council Tax Reduction (Scotland) Regulations 2012 or the Council Tax Reduction (State Pension Credit) (Scotland) Regulations 2012;

    I argue the distinction in another post somewhere – I’ll try to find it

    Julian Hobson

    In it’s simplest form:

    A CT Scheme reduction is made under s13A(1)(b) s13(2) tells you how to make it.

    A CT Reduction under s13A(1)(c) is made outside of the scheme – anybody that says the requirement to publish the availability of a discretionary reduction has to be a feature of the CT scheme means that a reduction under s13A(1)(c) is itself a scheme reduction is barking up the wrong tree (in my view)

    You might as well be saying DHP is HB and we all know it isn’t. It can be awarded in addition to HB or UC housing costs but is a different animal just like a Discretionary Reduction is not a Reduction under a Council Tax Reduction Scheme

    Peter Barker

    Thanks Julian

    I agree with you about s13A(1)(c) and public funds and that could be the answer here: grant him a discretionary reduction equal to the amount that he would have been awarded if he had access to public funds.

    I also share your doubts about SMI but the person who brought this to me is adamant that it will be agreed. I must admit I have seen many cases where severe mental illness is signed off as SMI and the billing authority doesn’t bat an eyelid. I had always assumed that the intention was to cover profound learning disability, acquired brain injury or dementia

    Julian Hobson

    Indeed – there are thousands of folk out there getting SMI that ought not to be – the whole point was that you cannot reasonably make decisions about who to vote for because of lack of capacity and so absolved of the responsibility of Council Tax.

    Just on the s13A(1)(c) issue “scheme” is defined in Schedule 1A LGFA 1992 and onlt applies to schemes established under s13A(2) – it can’t be any clearer and the Immigration rules can’t use the word Scheme and then ignore the definition in the Act- Discretionary CTR existed alongside a separate to CTB when CTB was a public Fund, further evidence that it is not a public fund in itself notwithstanding that it is revenue foregone.

    Bob _Wagstaff

    We have amended the certificate that we send to the medical practitioner in SMI cases asking them

    1. Does the taxpayer have a severe impairment of social functioning?
    2. Does the taxpayer have a severe impairment of intelligence?
    3. Is the taxpayer’s condition permanent?

    It seems that doctors are less willing to answer YES to question 2 unless it is actually the case. And a taxpayer will find it difficult to argue that they are less intelligent than their doctor considers them to be.

    As to who should be liable for the charge, Sub Para 2 of Section 6 of the LGFA gives the hierarchy. From what you have described it sounds as if the SMI tenant is highest on the list.

    Sub para 3 then outlines that if there are two people equal on the hierarchy they shall be joint and severally liable. This does not appear to apply here.

    Sub para 4 then states that if there is more than one liable person and one has SMI or is a student they shall be disregarded from liability. Again does not appear to apply here from the above.

    So under Section 6 the SMI tenant is liable.

    Section 9 LGFA then details how to treat spouses and that they should be treated as jointly liable.

    So both should be liable. The question of SMI is considered before the liability of the partner.

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