How bailiffs reap the fraudulent rewards of their ‘phantom visits’

Telegraph
24.09.2011
By Christopher Booker

Charges for bailiffs’ visits that are never made may be costing businesses and householders tens of millions of pounds.

A curious little drama has been brought to my attention that sheds light on a scandal whereby hundreds of thousands of householders and businesses may be criminally defrauded of sums amounting to tens of millions of pounds a year, under the aegis of our local councils. This scam involves a widespread abuse by some private bailiffs of the system whereby they chase up unpaid council taxes and business rates, using a practice confirmed by both the Government and police to be a criminal offence under the 2006 Fraud Act.

According to the law, the first step in chasing down unpaid rates is the issuing of a court summons and a liability order, followed by two “attendances” by bailiffs to negotiate how payment might be made. If this proves fruitless, the bailiff attends for a third time to “levy distress”, making an assessment of those goods he is entitled to seize to cover the debt before removing them. For each stage the bailiff can add statutory charges for his services.

Where wholesale fraud has entered this system, since many councils outsourced their debt collection to private firms, is that the bailiffs pile on charges for all these things without doing any of the work required. Instead of visiting, they pay for threatening letters to be pushed through the door (known as “phantom visits”). A bailiff then arrives with a pre-prepared handwritten bill for “levy distress”, supposedly to cover all his costs for assessing and removing the goods – but again with no intention of doing the work for which he is charging. If this doesn’t work, he then returns once more to do the work for which he has already charged – again adding further illegal charges which can be as high as £1,000.

All this came to light thanks to the cussed tradition of a friend of mine, who refuses initially to pay his council tax as a way of protesting at the local authority’s waste of money and the failure of the police to pursue breaches of the law, such as burglaries. For several years, when the council’s own bailiff arrived, they would have a genial chat about the council’s shortcomings and my friend would then pay up. Last year, however, the bailiff said he would soon be redundant, since the council was outsourcing to a private firm, and warned that this would bring trouble.

Sure enough, this year the scam appeared to be unfolding by the book. Following a first “phantom visit” – a letter pushed through the door – my friend paid his tax, direct to the council. This did not prevent a second “phantom visit”, and demand for further charges, followed in September by an actual visit of a bailiff with a pre-written demand for “levy distress”, adding yet more charges to the sum that had been paid to the council two months earlier – bringing their total to £261. My friend complained to the police, but was told this was not a criminal but a “civil matter”.

In fact, it turns out that, in 2007, in answer to a specific question about this practice in the Lords, Baroness Scotland for the Government explained that charging for phantom attendances was a criminal offence under the Fraud Act. Last week, West Yorkshire police press office confirmed to me that not only was it a criminal offence under Section 2 of the Fraud Act for bailiffs to say they had visited an address when they had merely pushed a letter through the door, but that “anyone involved in this practice could also face charges of conspiracy to commit fraud”.

Indeed, concern about this scam is now so widespread that whole websites are dedicated to exposing this and other illegal practices of bailiffs. One of these, Bailiff Advice Online, estimates that bailiffs for so many councils are involved in this racket that the private firms could be illegally charging as much as £200 million a year in pursuit of unpaid council tax, plus £100 million more for unpaid business rates.

Part of the cause of the problem is that the statutory charges that bailiffs are entitled to demand no longer cover their costs. But this has led some of them to take matters into their own hands, by acting in flagrant breach of the law.

Furthermore, when debtors finally pay up, the bailiffs are entitled to take their cut from the proceeds first, leaving only what remains to the council. Thus, if the councils do not check whether the bailiffs’ charges are legal, surely they are party to what West Yorkshire police described as “a conspiracy to commit fraud by false representation”?

I shall be reporting further on this scandal.

Full article

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