Internal staff guidance on local taxation

Section 7 Common faults that result in complaints to authorities and to us

Payment allocation
The allocation of payments can give rise to problems, especially when there are arrears or
summonsed debt.
Council officers do not watch each account and decide where each payment will go. The
computer system will allocate it, according to some simple rules. Usually payments which
are exactly equal to instalments or exact multiples of instalments will be allocated to the
current instalment debt. After a summons is issued the computer may then allocate
instalment payments to any arrears as the right to pay by instalments is been lost once a
final notice has been issued.
You will need to establish what system the council uses, how it decided which payments
went where and how the taxpayer was told.
In Tower Hamlets LBC v J A and H C Fallows (1989) C A (RA 1990) 255 Mrs Fallows made
a cash payment to the Tower Hamlets cashiers. She did not get a receipt. The payment was
not credited to the rates account. A police and Council investigation found no evidence of
wrongdoing, it also did not find the money. Tower Hamlets asked the magistrates court for a
Liability Order. The court declined to issue one. The council appealed. The appeal court
found that the burden of proof was on the council to show the rates had not been paid. In
deciding on the balance of probabilities the magistrates had not erred. The evidence given
by the council had shifted the evidential burden of proof to the ratepayer, she had given
evidence at that point and discharged the evidential burden of proof placed upon her.
Legally taxpayers should pay as billed, so the council does not need to say how any odd
payments may be allocated. But if the taxpayer has specified, preferably in writing, where
they want payments to go, and the council has agreed, then there should be some
mechanism in place to ensure this happens.

August 2016