Agenda item

To consider the report, comment on the content and support the operations in place by the Department.

DECISION:

 

·        To accept the report

·        To support the work and welcome the improvements that have been made in response to the announcement that Cyngor Gwynedd's Tax Collection rates were the lowest in Wales 2024/25

·        To accept that the 182-day lettings threshold has significantly increased the Unit's work

·        To accept that the approval of a Council Tax Reduction Policy under Section 13A(1)(c) of the Local Government Finance Act 1992 by the Cabinet on 11-11-25 responds to situations where support is offered to residents facing exceptional financial hardship or unusual circumstances but a request was made for further consideration as to whether the Policy addressed the situation of the owners of holiday units who have seen significant rises in their tax bills as a result of the increase in the lettings threshold.

 

Note:

·       To consider the effects of the situation on sustainable tourism and town centre regeneration

·       To model the impact of a potential exclusion policy on the overall performance of the Finance Department

·       A suggestion to consider using the empty properties premium and second homes premium to cover the salaries of staff administering the premium, rather than from the Finance Department's budget

·       Council Tax Reduction Policy Update under Section 13A(1)(c) to be submitted to the Committee in January 2026

 

In response to a request from the Chair, a joint report was submitted by the Head of Finance and the Assistant Head of Finance - Sustainability and Developments, outlining the length and size of the debt from tax collection and how the Council was operating to address the situation. It was explained that Council Tax collection rates (within the year) in Gwynedd were the lowest in Wales in 2024/25, with 92.9% of the debts collected by the end of the financial year - which equated to £8.2 million in owed taxes.

 

Reference was made to the collection rates on the different types of accounts for 2024/25 as well as the value of the uncollected debts per category. It appears from the data that the premium on second homes and empty properties affected general collection rates, with the debts on accounts including the premium as well as the basic tax at £3.9m (£3.1m on second homes and £0.8m on empty properties) and the debts on basic Council Tax accounts only, was £4.3m. It was noted that there was a collection rate of 95.09% on the accounts with basic Council Tax only, which was 2.16% higher than the average of 92.93% across all categories.

 

It was highlighted that administering the Premium also placed serious pressures on the ability of the Taxation Service to achieve its work, representing a huge proportion of the enquiries that the service had to deal with, along with weaknesses in the Service which had contributed to the decline in the collection rate, which included:-

·        E-mail backlog.

·        Delay in sending reminders during the year.

·        Delay before cases were transferred to the enforcement company.

·        Level of resources in the Recovery Team.

 

It was reported that key steps had been taken and continued to be put in place to strengthen the recovery arrangements. It was noted that a detailed action plan had been prepared and staff (internal arrangements and via an experienced tax agency) had been appointed to complete the work. In addition, a detailed timetable was put in place for sending reminders in 2025/26, delegation arrangements were reviewed so that officers were available to act during the absence of key officers and recovery structures in the Finance Department were reviewed.

 

It was reiterated that a change in legislation, where self-catering accommodation in Wales was required to be available for 252 days and let for 182 days a year in order to be included on the non-domestic rates list, had affected the collection rates.  In 2024/25, 692 properties were transferred back to Council Tax, with 558 of them returned during the second half of the year. It was noted that many of them were likely to transfer from the non-domestic rates list where taxes were not payable, to a Council Tax band where they needed to pay the basic council tax, and 150% of the Council Tax premium; they were also requests that were being back-dated (some back to April 2023) and as a result, the bills were substantial and therefore remained unpaid at the end of March 2025. In addition, by the end of September 2025, 395 further properties had transferred to a Council Tax band, compared with 134 for the same period last year. It was reiterated that the Welsh Government were conducting a consultation on the matter at present, and the outcome of the consultation could lead to further changes to the rules in the future.

 

In the context of the current situation, it was noted thus far in 2025/26, that 2,018 debt orders, to the value of £4.7m, had been received, with a further request to the Court on 26 November 2025, for 939 debt orders, to the value of £2.3m. The priority with the orders this year was to ensure that there was no delay before the cases were submitted to the enforcement company, in order to maximise the taxes that would be collected during the year. 

 

Gratitude was expressed for the report and for the response to the request for information.

 

Matters arising from the ensuing discussion:

·        Would adopting an Exemption Policy make the situation clearer than the Council Tax Reduction Policy under Section 13A(1)(c)? What is the 'propriety' of an exemption policy absence?

·        No doubt regarding the use of the Council Tax Reduction Policy under Section 13A(1)(c), but what was the timetable?

·        Need to consider modelling the impact of a potential exemption policy on the general performance of the Finance Department.

·        What were the side-effects of the situation on sustainable tourism and town centre regeneration? The objectives of the Authority had to be coordinated.

·        Should the Council have projected the situation considering the increase in the premium on second homes and empty homes?

·        That there was £7m in debt here - were further steps in place to improve the situation and reduce the figure?

·        That the loopholes in the arrangements for collecting the premium needed to be closed.

·        Sickness and delay were insufficient reasons for failing to act. Such excuses made the Council open to criticism.

·        Back-dated bills were concerning and caused worry to many. The costs were out of their reach.

·       Did the Policy address the situation of holiday unit owners, who had seen a substantial increase in their tax bills as a result of increasing the lettings threshold?

·        A delay from the Valuer's Office created a back-log of work.

·        The policy had to be implemented effectively - they owed this to ratepayers.

·        Had they considered increasing the premium on empty properties to 150%?

 

In response to the above observations, and to further questions, it was noted:

 

·       regarding the service's staffing structure, staff expertise and the service's reliance on agency staff, that work had been done to plan the workforce for the future. It was explained that experienced tax agency staff had been appointed temporarily to assist with the work back-log and great benefits were seen from their experiences, not only in the tax administration field, but in the specialist fields of recovery and the use of relevant systems. Whilst accepting that they could not speak Welsh, they did not contact the public - Council staff dealt with that aspect. It was reiterated that a student had completed one piece of specific administrative work relating to correcting names, in order to release the time of specialist staff. In addition, two Assistant Recovery Officers, a Professional Trainee - Taxation and Benefits as well as a Taxation Apprentice, had been appointed.

 

·        in terms of the propriety of the absence of an exemption policy, the Council followed clear guidance and complied with the Act and the instructions of the Valuation Office Agency. It was reported that every bill being implemented was implemented legally; that the Council Tax Reduction Policy under Section 13A(1)(c) gave powers to the Cabinet Member for Finance, Head of Finance, Assistant Head - Sustainability and Developments and the Taxation Manager, to look at and review specific cases, hardship cases and/or current bills - only the Cabinet had the powers before approving the policy; that listing 'specific matters' was seen as a risk and Members were reminded that any ratepayer could submit an appeal via a tribunal if they did not agree with the amount. That an update on the implementation of the Council Tax Reduction Policy Update under Section 13A(1)(c) would be submitted to the Committee in January 2026.

 

·        that modelling work had been completed and whilst accepting that introducing the premium had placed serious pressures on the taxation service, the tax had been increased for a valid reason in response to the housing crisis in the County.

 

·        regarding the number of debts being written-off and whether there were criteria to implement this, historically 98.5% to 99% were collected and around £1 million - £1.5 million had been written-off.  With the tax levels likely to increase, time will tell whether this figure would also increase. In response to a supplementary question about why the issue of staff shortages was not addressed sooner, it was noted that every service had undergone efficiency savings in the hope of trying to continue the service with less. With a change in legislation, requiring self-catering accommodation in Wales to be available for 252 days and let for 182 days a year, the requirements of the service had increased significantly in a very short time

 

·        that a delay with the Valuer's Office created a back-log of work and that assessments could take up to a year which affected the ratepayers. It was highlighted that the Valuer's Office was a part of the Inland Revenue, and the service had been split between Wales and England without a specific resource for Gwynedd - that Gwynedd's point of contact dealt with another 44 counties.

 

·        in response to acting to improve the situation, it was noted that communicating with ratepayers was a priority for the service, which took every opportunity to encourage ratepayers to come to the Council to discuss their situation. It was reiterated that every effort was being made to provide assistance and support, and with referrals also made to CAB for further support; that three notices and a summons were in the processing steps, with the ratepayer having an opportunity at every step to discuss, along with a special arrangement before implementing the mandatory steps. When an enforcement company would be pulled into the process, the ratepayer would receive a letter in advance of the arrangements. When the enforcement procedure failed, potential options would be considered - a pay order or forcing the sale of a property (although we tried to avoid this).

 

In response to a supplementary question about placing pressure on owners to sell empty houses, it was noted that this would mean that houses would be sold on the open market and therefore unlikely to be bought by a local person.

 

·       that court costs and collection fees were payable by the ratepayer.

 

·       that the Council received a contribution towards tax collection costs. It was explained that administrating the Premium placed serious pressure on the Taxation Service's ability to achieve its work and when the premium was established, a budget of £52,600 was received to fund two posts, and additional funding of £114,750 was received in 2024/25 to fund an additional post and a post upgrade within the service following evaluation. It was reiterated that a stronger bid needed to be made so that it would be possible to collect more with more staff. In response, it was suggested whether it would be possible to use the empty homes premium and second homes premium to pay the salaries of staff who administrate the premium, instead of from the budget of the Finance Department.

 

·        regarding the challenge from a member to differentiate in statements, that the Government's guidance noted that Local Authorities should deal with matters on their own merits, but that the Council noted that the Valuer's Office placed property in a category, that the situation was out of their hands, and if expressing 'out of their hands' was realistic, that the Council received definitive orders by the Valuer’s Office and that the Council acted on that. Further clarification on this point was given, namely that the Valuer's Office would decide whether the property was a council tax property, or a business rates property and that the Council has no legal means of changing this. The Valuation Office would also set the date of the change, and the taxation service must act from that day. In the context of a council tax premium, the Council would consider whether the premium was appropriate, and if there was justification for an optional reduction in accordance with the Council Tax Reduction Policy under Section 13A(1)(c) which has been approved. In terms of the differences in the statements, this could be considered.

 

RESOLVED

 

·        To accept the report

·        To support the work and welcome the improvements that have been made in response to the announcement that Cyngor Gwynedd's Tax Collection rates were the lowest in Wales 2024/25

·        Accept that the 182-day lettings threshold has significantly increased the Unit's work

·        Accept that the approval of a Council Tax Reduction Policy under Section 13A(1)(c) of the Local Government Finance Act 1992 by Cabinet 11-11-25 responds to situations where support is offered to residents facing exceptional financial hardship or unusual circumstances, but a request was made for further consideration as to whether the Policy addressed the situation of holiday units which had seen a substantial increase in their tax bills as a result of increasing the lettings threshold.

 

Note:

·        To consider the effects of the situation on sustainable tourism and town centre regeneration

·        To model the impact of a potential exclusion policy on the overall performance of the Finance Department

·        A suggestion to consider using the empty properties premium and second homes premium to cover the salaries of staff administering the premium, rather than from the Finance Department's budget

·        Council Tax Reduction Policy Update under Section 13A(1)(c) to be submitted to the Committee in January 2026