HOW TO... CLAMP DOWN ON COUNCIL TAX DISCOUNT FRAUD

First published by: The Guardian

The National Fraud Authority estimates fraudulent single person discounts cost councils and taxpayers £92m a year. Sefton council recovered £300,000 by working with credit agencies

Sefton council reclaim over £300,000 a year in Council Tax by cracking down on residents claiming a single person discount despite sharing a home. Council Tax fraud is estimated to cost councils and taxpayers £130m, of which £92m is undetected single person discount fraud according to the National Fraud Authority. This figure is based on earlier work by the Audit Commission which estimated that the rate of single person fraud totals 4% of Council Tax claims.

Whatever the true figure, it is clear from our experience at Sefton that investigating discount fraud presents a significant opportunity to raise additional funds for local authorities – and can be achieved cheaply and efficiently. Along with many other councils, Sefton has tackled the problem by data matching. As recommended by the Audit Commission, we used external data from credit referencing agencies to check against our own internal data. In Sefton alone, we recovered more than £300,000 owed to us in a single exercise working with both Avarto and Experian. This was £127,000 more than we originally envisaged at the outset and amounts to 4% of all single person claims being cancelled.

Evidence also shows that councils that conduct single person discount checks for the first time stand to gain sizeable cash benefits within only a few months of commencing a programme. At Sefton we worked with the credit agencies to gather advice on compliance and how to communicate with our residents using tried and tested letter campaigns. We adopted a phased approach; the first phase of letters encouraged those no longer entitled to the discount, but whose circumstances had recently changed, to renounce their claim of their own accord. Many people only needed reminding. This also allowed our fraud investigators to treat each case differently, and move more quickly to identify and tackle hardened cases of fraud.

We provided Experian with 25,661 records of people claiming sole occupier status. They returned 3,711 records which showed strong evidence of dual or multiple occupancy. We sent out letters to people whose residency check indicated multiple residents, and those receiving letters were asked to provide details of any adult occupant residing at their address.

As a result, 2,964 customers responded to the letters providing information on changes within their household. A further 894 reminder letters were issued for non-respondents allowing seven days to respond, or lose the entitlement to the discount. During the period of review there have been some enquiries from customers having their discount removed. Although three cases have been referred back to the agencies to check their records, none of the enquiries has resulted in either a formal complaint being raised or an appeal against the cancellation of the discount.

As a result we can claim an additional £308,000 in Council Tax per year – exceeding our project target by £137,000, or 80%. We have also achieved our yearly collection targets for 2011-12, ensuring that the increased debit is converted into additional income for Sefton council and the service’s our residents rely on.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX. 

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