Summary: Mrs X complains the Council failed to properly deal with her Council Tax Reduction claim and application for a Severe Mental Impairment discount. We found there was fault that warranted a remedy.

The complaint

1. Mrs X complains that the Council failed to properly resolve issues she raised about her Council Tax Reduction claim for her and her husband over the last five years. She complained the Council’s responses to their queries were delayed and the Council has requested excessive information.
2. Mrs X also complained in 2020 that the Council failed to grant a Severe Mental Impairment (SMI) discount for her council tax. She stated she originally provided evidence of this in late 2019.

Back to top

What I have investigated

3. We have investigated the events of Mrs X’s complaint from late 2020. We have not investigated older events. The last section of this statement explains the reason for this.

Back to top

The Ombudsman’s role and powers

4. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether an organisation’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
5. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)
6. The Social Entitlement Chamber (also known as the Social Security Appeal Tribunal) is a tribunal that considers housing benefit appeals. (The Social Entitlement Chamber of the First Tier Tribunal)
7. The Valuation Tribunal deals with appeals against decisions on council tax liability and council tax support or reduction.
8. If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

Back to top

How I considered this complaint

9. We spoke to Mrs X and considered the complaints she and her husband made. We asked the Council for information and considered its response to the complaint.
10. Mrs X and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

Back to top

What I found

Housing Benefit Regulations 2006

11. The regulations state that the average earnings of self-employed earners will be derived from the net profit of their business, taking account of tax and national insurance. The regulations set out the relevant factors for calculating net profits in some detail.

Sandwell MBC’s Council Tax Reduction Policy

12. The Council’s policy on Council Tax Reduction (CTR) claims also sets out in detail how self-employed earnings will be calculated. This too is based on the net profit of the business.

What happened

13. In May 2021 Mr X contacted the Council to question the figures the Council had used to decide their CTR claim. Mr X noted the Council had calculated the income from their business was around £3000 between them, but Mr X stated this was incorrect as their business made a loss.
14. Mr X complained formally in early June. He stated he was being chased to pay the council tax arrears and the matter was causing significant distress to his wife, who was disabled.
15. The Council’s response on 10 June provided a breakdown of the income from benefits, tax credits and self-employed earnings. The Council arranged to send copies of income assessments carried out in 2017, 2018 and 2019. The Council explained that not all the business expenses had been allowed, as some were considered personal rather than business expenses. For example, the Council allowed 80% of their telephone bill as a business expense, but considered 20% was personal and could not be taken into account. Similarly, not all food claimed was considered a business expense. The Council also discounted cash withdrawals. The Council set out how it calculated Mr and Mrs X’s self-employed income.
16. On 14 June the Council sent a response to Mr X’s complaint. It stated an officer had reviewed the expenses used to calculate CTR. It found the council tax payable was correct. However, in recognition of the stress the matter was causing to Mrs X, the Council agreed, as a gesture of goodwill, to clear their remaining council tax balance using the COVID hardship fund.
17. Mr X thanked the Council for offering to clear the arrears, but rather than use the hardship fund, he sought the recalculation of the claim accepting that all the expenses they submitted were legitimate business costs. He explained the nature of the business was unique and set out why he considered all expenses should be allowed.
18. In response, the Council listed information it would need to see to review the matter further. This included capital statements for the business account, receipts for business purchases made from cash withdrawals, accommodation and food receipts and details of whether the whole family went away on work trips. The Council later provided more time to send the information. The Council’s letter noted that if Mr X still disagreed with the Councils decisions on CTR he had the right to request an appeal. It explained where information about appeals could be found.
19. In early July Mr X asked the Council to escalate his earlier complaint to stage two of the complaints process. He stated the matter should be looked at independently. Mr X reiterated he was concerned about the way expenses had been dealt with and that he was required to send more information. Mr X also complained that an application for a Severe Mental Impairment (SMI) discount submitted in 2019 was outstanding.
20. In July 2021 the Council re-considered the SMI application and granted a SMI discount, backdated to January 2019. The backdated discount put Mr and Mrs X’s council tax account into credit by £345.
21. At the end of July and in early August Mr X made contact with the Council to explain he and his wife both had health difficulties. They were both under great strain. He said he had been trying to speak to someone and the amount of paperwork requested was too onerous. He asked the Council to consider the matter on information previously supplied. An officer called Mr X on 9 August and agreed a slight reduction in the information required, on receipt of which the Council would reconsider the claim.
22. Mr X provided some additional information on 18 August. In contact with the Council Mr X disclosed that his wife had attempted suicide recently. The Council contacted Mr X in response, noting his difficult circumstances. It stated however, that not all of the information agreed on the telephone on 9 August had been provided. It asked for this to be sent within four weeks.
23. On 15 September the Council wrote to Mr X. Under the heading ‘Housing Benefit’ the Council stated it had agreed to accept the expenses previously excluded were incurred as part of business expenditure. It stated Mr X’s self-employed income had been amended from 4 June 2020. The letter also had a heading ‘Council Tax Reduction’. Under this heading it stated the Council had also reviewed the Council Tax Reduction claim, but the sentence was incomplete. It said nothing about the outcome of the CTR claim review.
24. In late September, separate to the issues Mr X complains about, I understand the Council sent notification letters of overpayments in respect of Housing Benefit and CTR. The Council later explained this was because tax credits had been in payment for two dependants that had left the household.
25. On 8 October the Council responded to Mr X’s July request to escalate his complaint. The Council stated that, while reviewing the case to decide the complaint, issues had arisen that needed review. The Council stated it realised it failed to seek necessary information to verify self-employed income between April 2019 and April 2020. The Council listed ten things it needed/questions that needed answering by the end of October. These included details of sources of income, bank statements and specific queries about business purchases.
26. On 20 October the Council noted the overpayment that had occurred and explained why this happened.
27. On 3 November the Council notified Mr and Mrs X that their benefits had been suspended. When Mr X challenged this the Council explained that the information requested to support the claim on 8 October remained outstanding. When this was the case it was standard procedure to suspend the claim after four weeks.
28. On 4 November, the Council sent a response to Mr X’s request for an independent review of his benefits claim. It re-iterated that:
• in July 2021 the Council had applied a back-dated SMI discount backdated to January 2019 and revised bills were issued showing a credit on the council tax account.
• in September 2021 the Council had allowed the expenses Mr X submitted and a formal decision letter had been sent confirming the impact this had on the claim.
• the Council stated that while looking into his complaint, it had identified that it should have sought evidence to support the 2019/20 claim for CTR. This prompted the request for more information on 8 October. As this was outstanding it was being followed up by the benefits team. The Council stated, if Mr X disagreed with benefits decisions taken, he should in future utilise his right of appeal.
29. In November Mr X complained further. He noted the Council stated in September that it accepted their 2019/20 accounts and the business expenses claimed in that period. But, on 8 October, the Council had requested further information. He felt the Council’s actions were to penalise him for making a complaint. He stated an officer told him if he dropped the complaint the suspension of the account would cease. Mr X asked the Council why the information from 8 October had been requested.
30. On 24 November the Council followed up the missing information from October. The Council acknowledged it had received a partial reply and that Mr and Mrs X were having health issues, but it reiterated its position and the need to send the information required. It explained why it was required. The Council stated if the information was not received by 24 December the claims would be terminated.
31. Following further contact from Mr X, the Council told him that rather than make a further complaint about the benefits decisions, Mr X should use the appeal process.

Severe Mental Impairment Discount

32. The Council’s response to Mr X’s complaint recognised that Mr and Mrs X first made a claim for a Severe Mental Impairment (SMI) discount in 2019. The Council told Mr X that when the forms were originally received, the GP part of the forms was not properly completed. The Council sent a further blank form to Mr and Mrs X but failed to explain why. The Council acknowledged that this was a failure on its part and Mr and Mrs X would have most likely have disregarded this given they had already made a recent claim.
33. The Council provided evidence that after fully completed forms were received, a SMI discount was applied and backdated to 23 January 2019; the date from which evidence was provided of Mrs X’s eligibility for a related benefit. The Council told Mr and Mrs X in July 2021 that if they provided evidence Mrs X was diagnosed and eligible for a related benefit from an earlier date this would be considered.

Was there fault by the Council

Process followed and information requested

34. I recognise that Mr and Mrs X both have health difficulties and found the level of information required by the Council onerous on their claims for Housing Benefit and CTR. However, councils have a duty to ensure that they are paying benefits correctly. This means they have to request information to verify claims. When people are self-employed, the information required by a council to understand and verify income is likely to be greater than for claimants who are employees.
35. Having considered the information the Council requested, I do not consider the level of information the Council requested for their claim has been excessive. Mr and Mrs X’s business is also unusual which likely means some additional requests for information to understand their situation and income correctly.
36. I welcome the consideration the Council gave to Mr and Mrs X’s difficult circumstances by clearing council tax arrears using COVID-19 hardship funds. This shows the Council as willing to consider using discretionary powers and funds when appropriate.
37. I note that Mr and Mrs X sought independent verification of the Council’s decisions. If someone disagrees with a housing benefit or CTR decision, they can ask for a review. Once they have had a review, and if they remain unhappy with the decision, they can then appeal to a tribunal. The law says people should appeal within one month of the date of the decision they think is wrong. The Council advised Mr and Mrs X of their rights of appeal on formal decision notices and in response to their complaint. It would seem appropriate for Mr and Mrs X to use their rights of appeal to challenge the actual outcomes. This is because the Tribunal can consider the claims in detail, taking account the relevant regulations and policy and Mr and Mrs X’s point of view.
38. Although I found no fault in the information the Council requested to determine Mr and Mrs X’s claims, I found that some of their subsequent complaint responses could have been clearer. On one hand the Council accepted on 15 September that the evidence of expenses already presented was acceptable for a Housing Benefit claim, and their self employed income had been updated. but when doing so, no comment was made about the CTR claim.
39. At the same time, prompted by the complaint investigation, the Council was requesting more information about largely the same issue (their self employed income) for 2019-20. This was because it found it had not requested sufficient information at that time. This seems a contradictory position about whether the council accepts Mr and Mrs X’s information or not.
40. In addition, there were lengthy delays in responding to Mr and Mrs X’s complaints. The issues raised in July were not responded to until October. This is likely to have exacerbated the stress Mr and Mrs X felt about the issue to some degree.

SMI

41. There was also some fault in the way the Council dealt with Mrs X’s claim for SMI. The Council acknowledged that it did not explain what it needed when the original claim forms were not properly completed. This meant the reduction in the council tax payable by Mr and Mrs X was also delayed. This is likely to have caused a degree of hardship between 2019-2021. This warrants a form of remedy.
42. Although I recognise Mr and Mrs X considered that the credit of £345 should be refunded when they requested it, I do not consider it was fault that the Council retained this sum. This is because there were still queries outstanding regarding their CTR claim. The outcome of which could result in changes to the amount due. So, while the delay in paying CTR was partly due to fault by the Council, the decision to retain the credit while the matter was resolved, was not fault in my view.
43. I have commented below about how the injustice caused by the areas of fault we identified should be rectified.
44. I note that following my draft decision, on our recommendation, the Council wrote to Mr and Mrs X to clarify why there was an apparent discrepancy between its position as set out on 15 September, to accept the level of information provided for benefits from 2020, and their request for more information to cover 2019/20. It stated that the matter had since been reconsidered and it accepted the information already supplied. It stated this was to avoid further delay in the claim. The Council was now clear about the evidence and information it needed for the next financial year so this would be requested properly. Although the Council should have awaited our final decision before acting on our draft recommendations, this has clarified the situation.

Back to top

Agreed action

45. To recognise the additional stress caused as a result of the delay and confusion in the way the council responded to the complaint, and to recognise the fault in the way the Council dealt with the SMI claim led to a delay in making the appropriate discount, the Council agreed to apologise and pay Mr and Mrs X £300.

Back to top

Final decision

46. There was fault by the Council.

Back to top

Parts of the complaint I have not investigated

47. The law requires that complaints are generally raised with us within twelve months of someone being aware of the issues subject to complaint. We have considered more recent issues that Mrs X complained about, but not the events that occurred five years ago. This is because the older issues could have been brought to us sooner.

Back to top

Investigator's decision on behalf of the Ombudsman