London Borough of Barnet (18 010 601)

Category : Benefits and tax > Council tax

Decision : Upheld

Decision date : 09 Apr 2019

The Ombudsman's final decision:

Summary: Mrs X complains about the Council’s handling of her property’s council tax. She says the Council charged her council tax when it should not have. She also says the Council took money from her bank account without permission and refused to open a council tax account in her name only. Mrs X says the Council’s actions caused her to incur overdraft fees and financial loss. The Ombudsman finds fault with the Council for wrongly closing Mrs X’s council tax account. We recommend the Council pay Mrs X £100. We do not find fault with the Council’s other actions.

The complaint

  1. Mrs X complains about the Council’s handling of her property’s council tax. In particular, she complains:
  • the Council billed her for council tax between November 2017 and May 2018 despite making an administrative error. Mrs X says her lodger was responsible for the payment of council tax during this period;
  • the Council took money from her bank account by direct debit without permission, and;
  • the Council refused to open a council tax account in her name only.

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The Ombudsman’s role and powers

  1. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
  2. 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)
  3. The Valuation Tribunal deals with appeals against decisions on council tax liability and council tax support or reduction.
  4. 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

  1. I spoke with Mrs X and considered the information she provided.
  2. I sent a draft decision to Mrs X and the Council and considered their comments.
  3. I sent a second draft decision to Mrs X and the Council and considered their comments.

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What I found

  1. Usually one person, called the liable person, is liable to pay council tax. It is usually the person living in the property who is the liable person. If more than one person lives in a property, the Council uses a system called the hierarchy of liability to work out who is the liable person. The person at the top, or nearest to the top, of the hierarchy is the liable person. Two people at the same point of the hierarchy will both be liable
  2. The hierarchy of liability is:
  • a resident who lives in the property and who owns the freehold;
  • a resident who lives in the property and who has a lease;
  • a resident tenant;
  • a resident who lives in the property and who is a licensee. This means they are not a tenant but have permission to stay there;
  • any resident living in the property, for example, a squatter;
  • the owner of the property who does not live there.
  1. The owner of the property will be liable to pay if the property is in multiple occupation.

Direct debit

  1. A direct debit is an instruction from a person to their bank or building society. It allows the organisation a person wants to pay, to collect varying amounts from the person’s bank account.
  2. The organisation must give notice of the amount and dates of collection. If there are any changes to the amount, the organisation must give notice. This is normally ten working days.
  3. A person can cancel a direct debit at any time by contacting their bank or building society. It is also recommended the organisation concerned is notified of the cancellation. Once cancelled, an organisation would have to get a person’s authority to reinstate a direct debit instruction.

What happened

  1. Mrs X’s husband, Mr X, owns the property she lives in. Mrs X rented two rooms to a lodger. These rooms were part of the main property. Mrs X remained living in the property while she rented the rooms to the lodger.
  2. The council tax account for the property was in Mr X and Mrs X’s name. They had a direct debit set up on the account to take payments automatically.
  3. In November 2017, Mrs X made a private agreement with her lodger that he would be responsible for paying council tax. Mrs X charged her lodger a reduced rent because of this. This agreement was signed by Mr X.
  4. Mrs X said her lodger confirmed he had contacted the Council, following their agreement, and told it he was liable for council tax.
  5. The Council wrote to Mrs X and confirmed it had closed her council tax account. The Council also sent Mrs X a closing bill for the period April 2017 to November 2017. Mrs X did not cancel her direct debit.
  6. The Council said it did not receive any request for a change of liability for Mrs X’s property. It explained if it had received a request, it would have declined to place the council tax liability in the lodger’s name. It explained this was because council tax liability would fall to the occupying owner when the owner lived in the property with the lodger.
  7. The Council explained it had wrongly closed Mrs X’s council tax account because a moving form for another person had been associated with the property. The Council explained it had apologised to Mrs X and spoken to the people responsible for the mistake. The Council also explained there was now one person responsible for referencing moving forms.
  8. Mrs X confirmed she received letters from the Council addressed to a person who did not live in the property. The letters were addressed to the person who the Council had wrongly made liable for council tax for Mrs X’s property. Mrs X explained she assumed the letters were just wrongly addressed. She said she returned at least one letter by marking it as ‘not known at this address’. She said she threw some of the letters away.
  9. In May 2018, the lodger left the property. Mrs X emailed the Council and asked it to transfer the council tax liability for the property into her name only.
  10. In June 2018, the Council asked Mrs X to confirm the occupiers of the property, the names of those who have left, the date left, and any forwarding addresses. Mrs X confirmed she and her children were current occupiers. She also confirmed she had no information on the previous occupiers. Mrs X did not confirm if Mr X still lived in the property or if he had left the property permanently.
  11. The Council explained it could not open a council tax account solely in Mrs X’s name because it did not have information about when Mr X left the property. The Council has asked for further information on all the occupiers of the property so it can consider the names council tax liability should be placed under.
  12. The Council reopened Mr X and Mrs X’s council tax account in July 2018. As the Council reopened the account, it said the previous direct debit arrangement was restored. The Council told Mrs X it had reopened her council tax account and that there was a charge payable. The Council sent Mrs X two council tax bills for the 2017/18 and 2018/19 tax period.
  13. The council tax bills showed a list of payments the Council would collect by direct debit. The bills also showed the dates the Council would take the payments. The bills showed two payments were due to be taken at the end of August 2018. The Council sent the bills more than ten working days before the payment was taken.
  14. Mrs X said the Council should not have taken the payments as she believed the old direct debit was cancelled when the council tax account was closed. She said any future charge for council tax should have needed a fresh direct debit agreement. Mrs X also said she asked the Council to set up a new direct debit and this would have voided the old direct debit agreement.
  15. In response to my first draft decision, the Council said it had previously given information to Mr X, in 2015, about council tax liability. The Council said it told Mrs X she was jointly and severally liable for council tax payments as Mr X was the owner and occupier of the property. The Council said this meant Mrs X had been aware the Council was unable to make additional occupiers liable for council tax if they remained living at the property. I have seen evidence of the information the Council said it provided to Mr X.

Analysis

Council tax account

  1. Mrs X’s lodger rented two rooms in the property. The rooms were not separate to the property and were not part of a registered separate property. Mrs X also lived in the property when the lodger was there.
  2. According to the hierarchy of liability, Mrs X was liable for the council tax as she was a resident tenant/licensee. The Council has also explained it would not have accepted placing council tax liability in the lodger’s name. It explained this was because council tax liability would fall to the occupying owner when the owner lived in the property with the lodger.
  3. The evidence also shows Mr X was given information by the Council in 2015 that he and Mrs X were jointly liable for council tax as he was the owner and occupier of the property.
  4. Therefore, while Mrs X was not the occupying owner, I am satisfied she would have been considered jointly and severally liable for council tax as she is married to Mr X.
  5. If Mrs X disagrees with this, the correct body to deal with the matter is the Valuations Tribunal. It is open to her to take this matter to them.
  6. The evidence suggests Mrs X had a private agreement with her lodger that he would pay council tax. She reduced his rent in recognition of this. The evidence also shows the lodger had confirmed to Mrs X he had contacted the Council and told it of his liability for council tax. However, the Council said it did not receive any request for a change in liability.
  7. The Council has accepted it was at fault for wrongly closing Mr X and Mrs X’s council tax account. It highlighted it closed their account because a moving form had been wrongly associated with their property. The Council apologised for the mistake and this was appropriate in the circumstances. I must now consider if the fault identified caused Mrs X any injustice.
  8. I am of the view the fault identified did cause Mrs X an injustice. This is because the Council incorrectly closed Mr X and Mrs X’s council tax account when it should not have. This caused confusion and inconvenience to Mr X as she had to pursue the matter with the Council to clarify the situation.
  9. Mrs X also said she has lost out financially due to the Council’s mistake as she had reduced her lodger’s rent as she had agreed the lodger would pay for council tax.
  10. The Council had previously provided Mr X information that a third party could not be made liable for council tax while he remained living in the property. The Council also explained Mrs X was jointly and severally liable for council tax as she was his partner. I note the agreement with the lodger was signed by Mr X. However, it is reasonable to expect that Mr X would have been aware the lodger could not have been made liable for council tax when he signed the agreement.
  11. Therefore, on balance, it would be reasonable to expect Mrs X or Mr X to have, at the very least, clarified with the Council whether it was possible for her lodger to be made liable for council tax.
  12. Further, as the agreement Mrs X had with the lodger was a private agreement, it is not a matter for the Council. The Council cannot be held responsible for any agreements privately made.
  13. Therefore, while the timing was unfortunate (as the Council closed Mr X and Mrs X’s council tax account at the same time Mr X made the agreement with the lodger), I do not find the Council was at fault for the financial loss Mrs X incurred as a result. This is because, on balance, I find Mrs X was aware a third party could not be made liable for council tax payments while she remained living in the property as she was jointly and severally liable for council tax.

Direct debit

  1. The evidence suggests Mrs X did not cancel her direct debit when the Council closed her council tax account. She said she did not cancel it because she thought it would be cancelled automatically when the account closed.
  2. The Council said when it reopened Mrs X’s council tax account, her direct debit was reinstated. The evidence shows the Council gave Mrs X notice (more than ten working days) of the payment amount and dates of collection.
  3. There is no evidence to suggest the Council’s actions to take the payments using direct debit was inappropriate. The Council had told Mrs X in advance of the payments and the dates the Council would collect the payment. Further, as Mrs X had not cancelled her previous direct debit, the Council did not have to get her authority again before collecting the payments.
  4. Therefore, the Council was not at fault for taking council tax payments by direct debit.

Council tax account: Mrs X’s name

  1. Mrs X said she asked the Council to create a council tax account in her name only. She did not provide the Council with information about whether Mr X had permanently left the property and when he left.
  2. The hierarchy of liability is used to work out who is the liable persons. It notes that two people at the same point of the hierarchy will both be liable. At the top of the list is a resident who lives in the property and who owns the freehold.
  3. The evidence suggests both Mr X and Mrs X live in the property. While Mr X is the owner of the freehold and higher on the hierarchy of liability, he is married to Mrs X. This makes Mrs X jointly and severally liable for the council tax.
  4. If Mrs X disagrees with this, the correct body to deal with the matter is the Valuation Tribunal. It is open to her to take this matter to them.
  5. Therefore, the Council’s decision to reopen the council tax account in Mr X and Mrs X’s name was appropriate in the circumstances as it did not have information to suggest Mr X had left the property.

Agreed action

  1. In addition to the remedy already provided, the Council should pay Mrs X £100 for the confusion caused by the closure of her council tax account and to recognise the time and trouble Mrs X has taken to resolve the complaint.
  2. The Council should complete the above remedy within four weeks of the final decision.

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Final decision

  1. I find fault with the Council for incorrectly closing Mrs X’s council tax account. The Council has accepted my recommendation. Therefore, I will complete my investigation.

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Investigator's decision on behalf of the Ombudsman

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