Summary: The Ombudsman found fault by the Council on Mr E’s complaint that it wrongly refused to refund overpaid council tax from 1993-1998 following a re-banding of his former home by the Valuation Office. It failed to keep records before 1999 despite sending estimated demand notices of the chargeable amount he had to pay which could change. This caused avoidable injustice as it did not have the records to show what he overpaid. The agreed action, including a refund of £810.93, remedies the injustice caused.

The complaint

1. Mr E complains the Council wrongly refused to refund overpaid council tax that arose for a former property he owned between 1993-1998 following its rebanding: as a result, he is denied the return of monies rightfully his.

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The Ombudsman’s role and powers

2. 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)
3. 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)

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The Council Tax (Administration and Enforcement) Regulations 1992 (SI 1992 No 613)

4. A demand notice is issued before, or during, the relevant year requiring payment of the council’s estimate of the chargeable amount. This assumes the relevant banding on the day of issuing the notice remains the relevant banding for the property. (regulation 20 (2) and (3))
5. If the chargeable amount proves less than the estimated amount, the Council shall notify the liable person in writing of the chargeable amount and any overpayment of the chargeable amount. This shall: be repaid if the liable person so requires; or, be repaid or credited against any subsequent liability of the liable person to make a payment of council tax to that council. (regulation 24 (2))

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How I considered this complaint

6. I considered all the information Mr E sent, the notes I made our telephone conversation, and the Council’s response to my enquiries, a copy of which I sent him. I sent a copy of my draft decision to Mr E and the Council. I considered their responses.

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What I found

7. Between 1986 and December 2014, Mr E lived in a property (Property A) in the Council’s area. Throughout that period, he says he paid council tax from its introduction in April 1993. His house was in Band G. Mr E moved out of the area in December 2014.
8. In 2018, he discovered the Valuation Office had changed Property A’s council tax banding to a lower band, Band F in August 2014. He argued this meant he overpaid council tax from April 1993 to December 2014 which the Council should refund.
9. The Council agreed only to refund an overpayment from April 1999 because its records only go back to this date and Mr E had no evidence of payments before that date either. Mr E argued this unfair as he had no reason to keep records this far back in time. He believes the Council owes him about £900.
10. In its response to Mr E’s complaint, the Council explained it was not simply a matter of calculating what the charge was for the period before 1999. It needed to know what he paid and a reduction in banding could cancel any allowances applied to his account at the time.
11. In response to my enquiries, the Council explained it bought a new computer system in 2005. It decided to bring data on to it from 1 April 1999, which was going back 6 years, as the Council considered this period complied with data protection requirements. Some of the data it copied on to discs became corrupt.

Analysis

12. I found fault on this complaint. In reaching this view, I took the following into account:
1. Mr E moved into Property A in 1986;
2. In 1991, before it launched the new council tax system in the country, the government needed to place every property in a valuation band. This reflected the value of a property it might reach if sold on the open market at that time. This was an enormous task and even with the help of estate agents, it is believed many valuations were done simply by driving past them, for example;
3. In 1993, the government introduced the council tax system and council tax became payable each year, including that for Property A. It was placed in Band G;
4. Under regulation 20, a council issues a demand notice before or shortly after the start of a relevant year. This sets out its ‘estimate’ of the chargeable amount which is based on several assumptions. Liable owners pay the estimate of the chargeable amount. For most council taxpayers, this estimated amount will not change;
5. In December 2014, Mr E moved out of Property A;
6. The estimate may change because circumstances may change leading to a re-calculation. One such change of circumstance, which affected Mr E, was the re-banding of Property A. He discovered the re-banding in May 2018. The Valuation Office re-banded it to Band F, effective from 6 August 2014. The council tax payable under this band was less than that under the previous one;
7. In 2018, the Council notified him of the ‘chargeable amount’ because of the re-banding;
8. The Council refused to pay Mr E the overpayment that arose from 1993 to 2014 in full. This was because of its record keeping. The Council argued it only kept council tax records from 1999. This means it has no evidence about council tax demands, payments, or discounts for example, before that date;
9. As Mr E could not provide evidence of payments before that date either, the Council would only refund the overpayment that arose from 1999 to 2014;
10. The failure to keep records before 1999 is fault. As the Council sends out estimated demands, there was always the possibility changes in circumstances, such as re-banding, could lead to it being less than the actual chargeable amount. This meant it was possible the overpayment could date back to 1993. This is because regulation 24 does not place any time restriction on overpayments where the chargeable amount is less than the estimated amount.

Knowing this, the Council should have ensured it kept records going back that far. The failure to do so means there is no evidence proving the chargeable amount was less than the estimate;

11. The Council says it decided only to save data back to 1999 because of data protection rules. One of the principles under the Data Protection Act 1998 was personal data must not be kept for any longer than was necessary. When it decided not to keep records before 1999, the Council failed to show it considered whether it was necessary to keep council tax records earlier than 1999 because of the possibility of properties being re-branded, for example;
12. The primary burden of ensuring it had evidence for just this kind of eventually was on the Council, not Mr E. Unsurprisingly, Mr E had no reason to think he might need to keep evidence of paying council tax, for a previous home, for more than 20 years; and
13. On balance, I am satisfied the failure caused Mr E an avoidable injustice. This is because had the Council kept these records, it is more than likely that it could have calculated the overpayment due for this period to Mr E. I am satisfied it is likely some overpayment would have arisen given the notices it sent out covering the subsequent years. I also the Council accepted Mr E’s residency, ‘was never in doubt or questioned’ for this period.
11. In response to my draft decision, the Council explained it had kept earlier records on three discs which became corrupted for reasons it could not establish. The Council no longer stores data in this way so this problem should not arise in the future. While I have no reason to doubt what the Council says about storing data on these discs, the outcome for Mr E was the same. There were no records, or back up records, for this period.

Agreed action

14. I considered our guidance on remedies.
15. The Council will, within 4 weeks of the final decision on this complaint, do the following unless otherwise stated:
1. Send Mr E a written apology for the failure to keep council tax records between 1993-1998; and
2. Pay him £810.93, having used its best efforts to calculate what the overpayment might have been for this period, taking into account any transitional arrangements that applied. It will pay this amount to him within 7 days of the earliest Council Audit Committee meeting.
16. The Council also offered to pay Mr E £50 as a gesture of goodwill, which it should do within 7 days of the earliest Council Audit Committee meeting.

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Final decision

17. The Ombudsman found fault causing injustice on Mr E’s complaint against the Council.

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Investigator's decision on behalf of the Ombudsman