Summary: Mr X complains about the way the Council has recovered outstanding council tax from him. We find fault by the Council in some of its consideration about whether to take bankruptcy proceedings or seek a charging order to secure its debt. This has caused some injustice to Mr X as uncertainty. The Council has therefore agreed to further consider the affordability of any payments Mr X can make towards his debt and reconsider its existing recovery protocol.

The complaint

1. Mr X complains the Council:
1. Has acted unreasonably when recovering council tax arrears from him;
2. Wrongly denied him a single person discount on his council tax account between 2015 and July 2017.
3. Failed to take account of his disability when considering what council tax discounts and exemptions to apply.
4. Made inappropriate remarks and asked him unreasonable questions about his ex-partner’s whereabouts at a meeting before a court hearing in 2016.
2. Mr X says that because of the above, the Council has not provided him all help he should receive towards his council tax. In particular, he says because he could not tell the council where his ex-partner lived in 2016, it denied him council tax support.

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What I have investigated

3. I have investigated those parts of Mr X’s complaint summarised at parts a) to c) above. At the end of this statement I explain why I have not investigated that part of the complaint summarised at part d).

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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 a council’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. We cannot investigate a complaint about the start of court action or what happened in court. (Local Government Act 1974, Schedule 5/5A, paragraph 1/3, as amended). When a council uses bankruptcy proceedings to recover a debt, then any administrative action before service of a bankruptcy petition is within our jurisdiction. However, issues after the issue of a formal bankruptcy petition are outside of our jurisdiction. These would be matters for the court considering the application for bankruptcy.
7. The law says we cannot normally investigate a complaint when someone can appeal to a tribunal. However, we may decide to investigate if we consider it would be unreasonable to expect the person to appeal. (Local Government Act 1974, section 26(6)(a), as amended). The Valuation Tribunal deals with appeals against decisions on council tax liability and council tax support or reduction.
8. If we are satisfied with a council’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)

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How I considered this complaint

9. Before issuing this decision statement I considered:

• Mr X’s written complaint to the Ombudsman and supporting information, including that provided in a telephone conversation.
• Written information provided by the Council in response to our enquiries.
• Relevant law and guidance; including that contained within an Ombudsman Focus Report “Can’t Pay? Won’t Pay? Using Bankruptcy for council tax debts” (October 2011).
• Comments made by both Mr X and the Council in response to two draft decision statements setting out our thinking about the complaint.

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What I found

10. In July 2013, Mr X lived alone. He received a single person discount, providing a 25% discount on his council tax. He also received further help towards his council tax as he received council tax support (also known as council tax reduction). Council tax support is a locally administered means tested benefit which those on a low income can claim from their local council. In this case, the Council awarded Mr X council tax support based on him receiving the state benefits Employment Support Allowance and Disability Living Allowance. Mr X receives these state benefits because of disability.
11. In February 2014, the Department for Work and Pensions (DWP) told the Council that Mr X’s partner (referred to as ‘Ms Y’) had moved into Mr X’s property in November 2013.
12. The Council sent Mr X a form to complete for full details of this change of circumstances so it could review his council tax support claim. It says despite issuing a reminder, Mr X did not return the form.
13. So, in March 2014, the Council cancelled Mr X’s council tax support. It backdated this decision to November 2013. It also ended Mr X’s single person discount. It wrote to him advising him of these actions.
14. In May 2014 Mr X told the Council he was struggling to pay his council tax. The Council sent him a form to re-claim council tax support, but he did not return it.
15. Since this time Mr X’s council tax has fallen into arrears. When council tax goes unpaid the Council must issue the liable person with reminders and a final demand. If the bill remains unpaid the Council can seek recovery via the magistrates’ court. A council tax payer receives a summons for non-payment and the court must issue a liability order if the debt remains unpaid.
16. Having a liability order enables the Council to take other steps to recover the debt, including the use of bailiffs. In 2015, the Council passed Mr X’s debt to bailiffs to recover. They visited Mr X but found he had insufficient goods for them to carry out effective recovery. The bailiff notes say they advised Mr X to re-apply for council tax support immediately.
17. A liability order also enables a Council to seek committal to prison for non-payment of debt. On 31 March 2016, the Council began committal proceedings against Mr X for the debts he had then accrued. An officer completed a checklist before taking this action. It considered Mr X’s circumstances, the extent of the debt, recovery efforts to that time and what other recovery options it had considered or discounted.
18. A committal hearing took place on 22 April 2016. The Court adjourned the hearing. This was to allow the Council time to consider a council tax support claim made by Mr X on 19 April. It would also consider a request that he should receive a single person discount on his council tax.
19. The Council records that on 28 April 2016 Mr X withdrew his council tax support claim. Mr X denies this. He also said he wanted his single person discount re-instated from 1 April 2016.
20. On 29 April, the Council wrote to Mr X. It said:
• To consider his request for single person discount, it wanted Ms Y to say where she lived after moving out of his home and where she now lived.
• Mr X needed to maintain payments on his council tax due for the 2016/17 financial year. It stressed to Mr X that if his income was low he should consider re-starting the withdrawn council tax support claim.
21. The Council says Ms Y did not provide any information to the Council. But, in his 19 April application, Mr X had told the Council Ms Y had moved in with her mother. So, the Council contacted Ms X’s mother to check this. However, she told the Council Ms Y lived at Mr X’s address. The Council decided it could not therefore apply a single person discount on Mr X’s council tax account.
22. On 23 June, the Council told Mr X it had withdrawn its committal case. It would instead apply to the DWP to deduct money from his benefits, to pay towards his council tax debt. The Council stated it would place all other recovery action on hold, providing Mr X made payments due on the current council tax year, 2016/17.
23. The Council received no payments from Mr X. So, it now began recovery action on the 2016/17 council tax account also. It sent him reminder notices in September and December 2016. In January 2017, the Council issued a summons and in June 2017 it obtained a liability order.
24. The Council also ended recovery on earlier accounts through benefit deductions. This was because Mr X did not keep to the agreed repayment arrangement on the 2016/17 account.
25. In July 2017, the Council wrote to Mr X advising him that because he had not maintained payments it would again begin recovery action. It placed the account with bailiffs. They agreed a payment plan for payments of £65 per month between October and December 2017. Mr X made the first payment but no others.
26. On 3 May 2018, the Council reviewed the case. It decided to pass the account to its solicitor to consider further enforcement measures. The solicitor wrote to Mr X. They said if he did not make full payment, the Council would consider placing a legal charge on his property or issue a bankruptcy petition. The solicitor enclosed a Statutory Demand for payment, something a creditor must do before serving a bankruptcy petition.
27. On 16 May 2018 Mr X made a new council tax support claim. On his claim, Mr X told the Council his uncle had moved into the property. He referred to himself and his uncle needing a live-in carer. He felt the Council should not take their carer into account for council tax purposes. Mr X asked the Council to backdate his claim to 2015.
28. The Council asked Mr X to provide information to support his claim. It asked Mr X to confirm if Ms Y was also resident at his property and whether Ms Y was acting as a carer for Mr X or his uncle. In June 2018 Mr X provided information. He confirmed Ms Y was living at his house, as a live-in carer. He provided a copy of a care contract with Ms Y. He stated Ms Y was not his partner. Mr X asked the Council to backdate his council tax support to 2015. He stated he delayed making the claim because he expected repossession of his house by his mortgage lender.
29. The Council put council tax support into payment from May 2018, but did not backdate the claim. This was because Mr X had experience of claiming benefits and the Council felt there was no good reason he had not claimed sooner.
30. The Council noted DWP records show Ms Y at a different address. As Mr X stated Ms Y lived at his property, the Council noted Ms Y as a non‑dependant adult at the property on Mr X’s council tax claim. The Council noted that as two adults lived in Mr X’s home (he and his uncle), he could not receive a single person discount in any event.
31. Mr X has appealed against the Council’s decision not to backdate his council tax support.

Mr X’s complaint

32. Mr X complained to the Council at the end of May 2018. I summarise his complaint as follows, Mr X said:
• When he told the Council Ms Y had moved out of his property, officers acted unreasonably. He felt they should not have asked Mr X for details of where Ms Y had moved to and it was wrong to follow up enquiries with her parents.
• Mr X said the Council would not accept Ms Y was his carer. Mr X said, as a live-in carer, the Council should disregard her for council tax purposes.
• Mr X was unhappy the Council started bankruptcy proceedings against him. He stated there were alternatives available but the Council had unreasonably moved straight to bankruptcy.
• Mr X suggested the Council treated him unfavourably because of his involvement in a high-profile court case against the council from the past.
33. In response, the Council stated Ms Y was not liable on Mr X’s council tax account. It also recognised it could sometimes disregard carers for council tax purposes. But Mr X could not receive a single person discount because he had disclosed that he lived with at least one other adult.
34. The Council stated it had a duty to carry out investigations about council tax support applications and a duty to protect public funds. It felt that considering bankruptcy proceedings was reasonable. It stated the outstanding council tax was around £7,500 but it did not wish to make Mr X homeless and hoped he would be able to pay.
35. Mr X was unhappy with the Council’s response. In further correspondence, the Council stated council tax support was means tested. So, it must understand the applicant’s circumstances. The Council noted the help Mr X gave to his uncle. It said it may be possible to consider reducing the council tax banding on Mr X’s property because of work carried out to the property when his uncle moved in. It suggested meeting with Mr X to discuss this and to ensure Mr X received all the benefits and support he could. Mr X was unhappy this response did not cover all the points he raised.
36. In August 2018, the Council wrote again to Mr X to explain the dates that he applied for council tax support and to summarise its decisions. It noted Mr X had complained about specific officers but they did not decide council tax support entitlement, considered by a separate team at the Council.
37. A manager met with Mr X in September 2018. I have seen the notes of their discussions but I have not repeated these here. The notes say Mr X agreed to pay £100 per month towards his debt. However, the Council noted this meant it would take him over five years to clear the debt. It suggested an agreement to repay the debt over 12 months. Following the meeting the Council wrote to Mr X stating it would not be pursuing bankruptcy. Instead, it would seek a charging order against his property for the outstanding debt. The Council stated it would not seek possession of his property provided Mr X paid £250 per month towards the debt from October 2018. Mr X explained that £250 per month was unaffordable and unachievable.
38. The Council told us it had issued reminders a, summons and liability orders and considered several alternatives before passing Mr X’s debt to its solicitors. It could not use an attachment of earnings. It also noted at various points Mr X had not pursued or cancelled his council tax support claim. When it agreed a payment plan with Mr X he had not kept to it. It had also found bailiff action unsuccessful.

Relevant law and guidance

39. There is a minimum debt level before a creditor can start bankruptcy proceedings.  From 1 October 2015 councils need to show there is a provable total debt of £5,000 or more. For council tax debts, liability orders prove the debt.
40. In our Focus Report “Can’t Pay? Won’t Pay? Using Bankruptcy for council tax debts” we highlight factors that councils should consider when deciding to use bankruptcy to recover unpaid council tax. We say authorities should consider the individual circumstances of the debtor, their equality duties and the implications of bankruptcy. They need to balance these factors against the implications if people come to believe the Council will not collect a debt and the potential for inequality between those who pay and those who do not. We also consider authorities can consider the impact that a fall in payment rates would have to their ability to provide other services.
41. Therefore we recommend councils should gather information about the debtor’s circumstances and have a debt recovery policy covering bankruptcy, committal to prison and charging orders. The policy should consider:
• Whether its recovery practice would particularly disadvantage a disabled person and what steps it could take to mitigate this.
• What steps officers must take before deciding on bankruptcy, committal to prison or a charging order.
42. We set out the steps we expect councils to take before taking bankruptcy proceedings. These include making efforts to contact the debtor in person and a senior officer considering the case. We would expect a senior officer to:
• Review the case history and the attempts made to recover the debt.
• Consider any disputed liability or outstanding claims, discounts or exemptions.
• Assess whether the debtor has assets that would clear the debt if bankruptcy is pursued.
• Consider if there is a reasonable prospect of recovering the debt in a reasonable time by other means.
• Gather and consider information about the debtor’s circumstances and if their failure to engage arose because of a disability. To consider if the debtor’s personal circumstances warrant protection form the consequences of the recovery action proposed.

The Council’s Recovery Protocol

43. The Council’s debt recovery protocol states the Council will identify and help customers who are vulnerable. It will signpost people to advice and it will work with other teams at the Council.
44. At the summons and liability order stage, the Council will encourage residents to contact the council. If a customer feels it has acted wrongly the Council will review the case. It states that it will only consider a charging order or bankruptcy once it has tried other ways of recovering the debt.

Findings

Complaint a) the Council has acted unreasonably in recovering council tax arrears from Mr X

45. Mr X does not dispute he owes council tax arrears and there is no complaint about the Council’s actions on obtaining liability orders to prove its’ debts. But Mr X says his financial circumstances prevent him from re-paying those.
46. I note that once a council obtains a liability order there are many ways that it may pursue recovery of its debt. These include use of bailiffs, attachments of earnings, deductions from benefits, charging orders or petitioning for bankruptcy.
47. I note that in this case, the Council first engaged bailiffs. As this was unsuccessful, in 2016 it next began committal proceedings. It provided a checklist which showed it properly considered the circumstances when doing so.
48. It then placed recovery action on hold and adjourned committal proceedings. It gave Mr X chance to put his financial affairs in order. He agreed to pay regularly towards the 2016/17 financial year, at first for three months. In return, the Council agreed to seek recovery of previous years’ arrears through deductions from benefits. But Mr X did not keep to his end of this agreement. I therefore consider there was no fault in the Council abandoning its attempt to seek recovery via benefit deduction and consider alternatives.
49. However, I find fault in the record keeping surrounding the Council’s decision to instruct solicitors in this case and how it has considered its alternatives since May 2018. The Council has clearly considered points made by Mr X about his council tax support claims. It has also considered what assets Mr X has, to see if they would cover his debt (should it pursue bankruptcy). I cannot criticise it for not considering other recovery alternatives before weighing up the case for a charging order or bankruptcy, when it has clearly done so. There is nothing unreasonable in any of this.
50. But I have concerns about what happened when it reached the point of deciding on bankruptcy or a charging order. The Council did not conduct a balancing exercise of the kind we recommended in our focus report. So, I cannot see what consideration it gave to Mr X’s disability or consequences of bankruptcy. Nor did it give advice to its officers on how to carry out such an exercise. This is where the fault lies.
51. The Council has confirmed that it does not now intend to continue with bankruptcy. The Council has advised Mr X it intends to apply a charge to his property to recover the council tax debt when his house is sold.
52. In comments on a draft decision it further suggested it had never decided for sure to pursue bankruptcy in this case. It suggests it had continued to weigh up the case for bankruptcy against a charging order. However, I considered this was not the impression given by serving a statutory demand on Mr X or in the instructions given to its solicitor.
53. Nonetheless, I accept the Council has now clarified its position. Any fault in the Council’s initial consideration of bankruptcy does not therefore cause injustice to Mr X as the Council did not proceed beyond serving the statutory demand. But if it decides to re-consider bankruptcy it should review Mr X;’s case, taking account of the guidance in the Ombudsman’s focus report quoted above.
54. The Council has suggested that if it obtains a charging order, it will not seek possession of Mr X’s property, so long as he pays £250 per month. Mr X complains this is unaffordable and therefore unreasonable.
55. It is not clear to me how the Council has decided this payment may be affordable to Mr X. I consider this a further fault. This does not mean the Council must accept whatever proposal Mr X offers. But when considering payment arrangements, the Council should assess the affordability of those, which includes taking account of Mr X’s income and expenses. Failure to do this causes uncertainty for Mr X which we consider a form of injustice.
56. Although I also note that if the Council obtains a charging order this will come under the jurisdiction of the county court. Mr X may seek an order stopping any later order for sale so long as he maintains payments. It would then be for the court to consider the competing demands of the Council as creditor against Mr X’s ability to repay.

Complaint b) that the Council wrongly denied Mr X single person discount between 2015 and July 2017

57. Mr X asked the Council to apply a single person discount to his council tax account in 2016. When the Council considered Mr X’s request, it received conflicting information. So, it did not agree and declined to apply a discount. I found no fault in the way the Council considered Mr X’s request in 2016. The Council can carry out checks to verify information customers provide, so there was no fault by the Council when doing so. I cannot see it overlooked any evidence confirming Mrs Y lived elsewhere. In particular, I note the lack of first hand evidence from Mrs Y on this point.
58. The other issue raised by Mr X is that Ms Y is a live-in carer and what impact this has. But I consider this is not relevant to his current circumstances. Mr X’s uncle has lived with him since 2017. So, irrespective of Ms Y’s address, the Council cannot give Mr X a single person discount.
59. In addition, if someone disagrees with a council’s decision not to apply a discount, they may appeal against that decision to the Valuation Tribunal. So Mr X had the right to challenge the Council’s decision by making such an appeal request. I note Mr X has appealed the Council’s decision not to backdate his council tax support in 2018. So I see no exceptional reason Mr X could not have appealed the decisions on single person discount if he wanted to do so.

Complaint c) the Council has failed to take account of Mr X’s disability when considering what council tax discounts and exemptions to apply

60. I can find no evidence to uphold this part of the complaint. I note the Council’s recovery protocol defines when customers may be vulnerable. It commits to signpost those customers to appropriate advice and help ensure they receive benefits they can.
61. The Council and its bailiffs record giving Mr X advice to make a council tax support claim on several occasions between 2014 and 2016. It says he either did not act on this advice, did not return claim forms or else withdrew a claim in 2016. While Mr X disputes some of the Council’s version of events, he has not provided me with evidence that leads me to say that it is wrong. It is also the case that no matter what advice the Council gave Mr X, the onus remained on him to claim council tax support. It is not an automatic entitlement and to receive support the claimant must engage with the Council. The facts here suggest Mr X’s engagement with the procedure necessary to receive council tax support was sporadic for several years until May 2018.
62. I also note the Council has explained Mr X that he may be entitled to a review of his council tax banding. This follows work to his house when his uncle moved in with him. I understand Mr X has not pursued this. Again, it is something that requires Mr X’s active engagement.

Agreed action

63. To remedy the injustice identified in paragraph 55 the Council the Council has agreed that within 20 working days of this decision it will:

• Conduct an affordability assessment, taking account of Mr X’s income and expenses to assess what payments he can afford to make towards his debt. It will consider the outcome of this assessment before deciding whether it should take any further recovery action in respect of Mr X’s property.

64. In addition, if the Council decides to proceed to bankruptcy to recover Mr X’s council tax debt in the future, it should review his case taking account of these findings and the Ombudsman’s Focus Report. It has agreed to complete a review of its Recovery Protocol to include guidance for officers about taking account of customers’ personal circumstances and disabilities. This procedural review will complete within three months of this decision statement.

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Final decision

65. I have upheld this complaint as there was fault by the Council in its consideration of Mr X’s circumstances once it began considering the case for bankruptcy against him. I am satisfied the Council has agreed action that shows it has learnt lessons from this complaint and will remedy the injustice caused to Mr X. I can therefore complete my investigation.

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Parts of the complaint that I did not investigate

66. I did not investigate the meeting Mr X had with an officer in 2016, which considered the whereabouts of his ex-partner and council tax support. This is because any complaint specifically about the meeting was late (see paragraph 5). The law is there for a reason. The further back we go in time the harder it is to reliably investigate complaints that rely on disputed conversations. I considered the meeting took place too long ago for me to investigate it robustly.
67. In addition, I have explained above that we could not find evidence the Council had acted with fault overall in its administration of Mr X’s council tax support claims. Mr X claims the injustice arising from the meeting was a denial of council tax support. But it flows from the earlier finding, we could not conclude this, even if there was any fault in the conduct of the meeting.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman