Prosecution bites – council tax fraud

In the current financial climate, it is not surprising that there is a general reduction in council tax payment rates in certain areas. The Ministry of Housing, Communities and Local Government reported that as of 31 March 2025, the total amount of council tax outstanding was £6.6 billion (a cumulative figure which includes arrears that may stretch back a number of years). This is an increase of £659.5 million compared to the end of 2023-24.

Councils write off large sums of unpaid council tax for many reasons such as; bankruptcy, death or inability to trace the debtor. With further increases in council tax likely from April this year, there will no doubt be additional challenges in recovering monies owed. Collection of outstanding debt can be difficult and further increases costs for councils. Overpayments can take many years to recover, particularly if low monthly repayment rates are agreed. 

Aligned with unpaid council tax is also increasing amounts of council tax fraud in various forms. Council tax fraud is committed when someone deliberately gives false or misleading information so that they can pay less or no council tax. This could be when a person claims to live in a single-person household when more than one person lives there, they might claim to be a student when they are not, might claim a property is empty when it is not, or could provide false information about income, savings, or household composition to qualify for reduced payments. This could be intentional or a failure to inform the local authority of changes in circumstances.

Pursuing enforcement action in respect of fraudulent claims for council tax benefit / reductions / exemptions is an option available to local authorities. The public interest in taking enforcement action is high. Local authorities must do all they can to protect public money. If a claim for council tax benefit is deliberately fraudulent from the outset or becomes fraudulent because of a failure to report a change in circumstances, there are further implications for the public purse.

Criminal offences can be pursued by local authorities under the Social Security and Administration Act 1992 or Fraud Act 2006 for benefit claims where false information was dishonestly submitted, for example, if income or savings are not declared in the application form. This provision also applies to claims that become fraudulent during their lifetime. Dishonestly failing to report a change in circumstances is also a criminal offence. A partner that moves into the home or a student who finishes their studies and enters into employment can impact on the amount of council tax benefit being paid. 

Penalties range from low level fines up to 10 years’ imprisonment.  A prosecution can aid recovery of overpaid benefits, either by way of compensation awarded by the courts, an attachment of earnings order or a confiscation order made under the Proceeds of Crime Act 2002 (depending on the overpayment amount involved and the period of time over which the fraud was committed).

The Council Tax Reduction Schemes (Detection of Fraud and Enforcement) (England) Regulations 2013 allows for penalties to be administered locally by local authorities as an alternative to prosecution. Other sanctions are available by way of written warnings and cautions.

Claims can go undetected for significant periods. Perhaps it is time to review your fraud investigation procedures and prevention strategies. Consider your fraud reporting mechanisms: Are they achieving the desired outcomes? Have you run an anti-fraud campaign recently? Do you have sufficient intelligence gathering processes and data sharing initiatives in place to spot anomalies? Are you taking enforcement action when you should be?

Prosecuting fraudsters not only raises income for local authorities but also sends a strong message, not only to those who are fraudulently claiming benefit to which they are not entitled, but to the rest of the public who may sometimes question how much enforcement action in this area is pursued.

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