Summary: Miss X complained about the way the Council pursued her for a council tax debt. The Council was at fault when it referred the account to an enforcement agent, even though Miss X was maintaining her payment arrangement. The Council has agreed to pay Miss X £100 to acknowledge the distress caused and to refund the court costs.

The complaint

1. Miss X complained about the way the Council has pursued her for council tax. She says it failed to clearly explain what she owed, took extra payments from her, pursued her for council tax at an address that was not hers and used enforcement agents when her payments were up to date. This has caused her distress and anxiety.

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The Ombudsman’s role and powers

2. 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). Miss X raised issues about her council tax and enforcement action back to 2016. I have considered what has happened since January 2018. It was open to Miss X to complain to us sooner about any recovery action before then and I consider it is too far back for me to investigate this issue now.
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)
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

5. I have considered the information provided by Miss X in writing and by telephone.
6. I have considered the Council’s response to my enquiries and the relevant law and guidance.
7. I gave Miss X and the Council the opportunity to comment on a draft of this decision and considered the comments I received in reaching a final decision.

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What I found

The law and guidance

8. The main legislation concerned with the collection and recovery of council tax is the Council Tax (Administration and Enforcement) Regulations 1992 (as amended) ("the Regulations"). Council tax is payable by monthly instalments, usually ten payments from April to January. Councils have discretion to decide when the instalments will be payable. A council and a taxpayer can, by agreement, make a special payment arrangement outside the normal instalment scheme.
9. If a council tax payer fails to maintain their instalments, the Council will issue a reminder. If they do not pay within 7 days the Council can apply to the Magistrates’ Court for a liability order. The Magistrates’ Court must grant an order if it believes that a sum is owed and has not been paid. Councils will charge costs for the issue of the summons and the grant of a liability order.
10. The Regulations only require a council to issue two reminders for each account in any given council tax year. If a third payment is not made by the due date, the Council is entitled to send a final demand for the entire outstanding council tax for that year, removing the right to pay by instalments.
11. A liability order gives a council legal powers to take enforcement action to collect the money owed. This can include taking deductions from benefits, getting an attachment of earnings (by which deductions are taken directly from earnings by an employer and passed to the Council) or using bailiffs. The Council can decide which recovery method it wishes to use but it can only use one method per liability order at one time.
12. The council taxpayer can enter an arrangement with the Council to clear arrears. The Council has discretion what sort of arrangement it will accept. Usually councils look to have the debt cleared by the end of the financial year and where the debt is for a previous year, it will also want to see payment for the current year maintained
13. A direct debit mandate authorises a company to collect money direct from the customer’s bank account whenever a payment is due. It does not have to be a fixed amount but the company should inform a customer if the amount changes. A standing order is set up by the customer with their bank. It is an instruction the customer gives to the bank to pay someone a fixed amount at regular intervals. Only the customer can change a standing order.

What happened

14. Miss X owns two properties. This complaint relates to one of the properties.
15. In March 2018 the Council issued Miss X with a council tax bill for 2018/19 for the property. Miss X had arrears still owing on her 2017/18 council tax account for the property. The council tax bill set out the monthly instalments Miss X should pay.
16. In April and May 2018 Miss X made two payments of £163. As these did not correlate to the instalment amounts set out on the council tax bill, the computer system automatically credited the payments to the outstanding council tax from the previous year (2017/18). This meant Miss X’s instalments from 2018/19 were still outstanding. The Council issued her with two reminder notices in May 2018.
17. Miss X continued to pay £163 a month by standing order. The June payment was credited to her 2018/19 council tax but as this was not enough to clear the arrears the Council issued Miss X a final notice. It issued a summons in July. Miss X called the Council in late July 2018. The notes record the Council explained the payments were used to pay the arrears and it agreed to set up a special payment arrangement.
18. Miss X arranged with the Council to pay £163 a month. Miss X emailed the Council in August 2018. She had attended the magistrates’ court for the liability order hearing and following this provided evidence to the Council she had continuously made payments on the account.
19. In response, in August 2018, the Council sent Miss X a breakdown of the account including a list of all the payments she had made. This showed Miss X had an outstanding balance of £1152.91. It showed that at the start of the 2018/19 council tax year Miss X carried forward a debt of £219.46 from the previous council tax year. The list showed the payment Miss X made in April 2018 and part of the payment she made in May 2018 were used to pay the arrears from 2017/18. This meant her 2018/19 council tax payments were not up to date.
20. In the email the Council explained that as she had not paid according to the bill, further recovery action continued. It set out the agreed special payment arrangement.
21. Miss X’s bank contacted the Council in late August 2018 to cancel the direct debit instruction for the special payment arrangement. As a result, the system automatically cancelled the special payment arrangement.
22. Miss X emailed the Council in September 2018 and provided evidence of the standing orders she had set up. The Council responded. It said the payments made did not match the monthly instalment plan on the bill issued in March 2018. It agreed she had made monthly payments, but these were not enough to cover her current year’s council tax and arrears. It confirmed the arrears were now settled. The Council advised she had set up an arrangement to pay the outstanding council tax from 2018/19 but the bank had cancelled the direct debit. It advised her to contact the Council if this was done in error to set up an arrangement or further recovery action would continue.
23. Miss X did not contact the Council but continued to pay the Council in line with the special arrangement by standing order rather than direct debit.
24. The magistrates granted the Council a liability order in September 2018, adding additional costs to the council tax debt.
25. The Council passed the liability order to the bailiffs in October 2018. The bailiffs delivered a demand notice to Miss X in December 2018 for £900. Miss X contacted a local councillor who in turn contacted the Council.
26. The Council responded to Miss X in January 2019. It explained Miss X had an arrangement in place. However, the bank had contacted the Council to cancel the direct debit. It said it had sent Miss X an email in September requesting that she contact the Council to reset the arrangement, but the Council had no record of contact. Miss X had continued paying £163 a month but as there was no special payment arrangement in place the full balance was due and so it had passed the account to the bailiffs. It agreed to take the case back from the bailiffs and to reset the arrangement on its system. It recalled the account from the bailiffs in January 2019.
27. In July 2019 Miss X complained to the Council that it had taken an extra payment from her account. An officer agreed to meet with Miss X to go through her accounts and payments. A councillor also agreed to attend.
28. At the meeting the Council explained payments were being taken by a direct debit as per the direct debit mandate it had received. In addition, Miss X had arranged a standing order so had overpaid on the account. It agreed to refund the overpayments. Miss X agreed to set up two standing orders, one for each council tax account for her two properties.
29. Miss X emailed the Council in July 2019 as three payments had once again come out of her account. She requested a refund. The Council responded and explained it had received the three payments from three standing orders; two of which were in line with what was agreed at the meeting. The third was for £163 which is what Miss X was paying prior to the meeting and should not have been made. It advised Miss X to contact the bank to cancel this standing order.
30. Miss X contacted the Council again in September as three payments had gone from her bank account. The Council reiterated these were standing orders over which it had no control. The Councillor offered to assist Miss X with resolving this.

Findings

31. Where payments are made which are different from the instalment schedule set out on the bill, the Council will automatically credit the payment to any arrears on the account.
32. Miss X made regular payments towards her council tax but as the payments were different from the instalment schedule these were credited to the arrears from 2017/18. Because of this Miss X’s 2018/19 council tax account went into arrears which led to recovery action. The Council issued reminders and a summons in line with the law and was not at fault.
33. The Council agreed to a special payment arrangement with Miss X, but the direct debit was cancelled on instruction from the bank. Although Miss X continued to pay by standing order, the cancelled direct debit broke the special payment arrangement. However, Miss X continued to pay the Council in line with the special payment arrangement and the Council failed to notice this. The Council obtained a liability order and passed the account to the enforcement agents when Miss X had made payments in line with the special payment arrangement. This was fault.
34. The Council did recall the account from the enforcement agent in January 2019 and reset the arrangement. However, Miss X had already received a letter from the enforcement agents causing her distress.
35. In response to my enquiries, the Council has accepted fault and has offered to pay Miss X £100 to acknowledge the distress and frustration this caused. This is appropriate and in line with our guidance on remedies however there were also unnecessary court costs added to the debt.
36. Miss X complained the Council took extra payments from her. The Council met with Miss X to go through her accounts and this was appropriate. It established extra payments were taken from Miss X’s account, but this was due to her initially having a direct debit and standing order in place. The Council stopped the direct debit and was not at fault. In July 2019 three payments came out of Miss X’s account again. This was because there were three standing orders in place. Standing orders are set up by the bank’s customer not the Council and only the customer can arrange, amend or stop a standing order. The Council had no ability to stop the payments once the standing order was set up so it was not at fault. When Miss X pointed out that extra payments had come out of her account, the Council acted appropriately and refunded the payments.

Agreed action

37. The Council has offered to pay Miss X £100 to acknowledge the distress and frustration caused and this is appropriate.
38. In addition, it has agreed to refund the £113 court costs to Miss X.
39. It should do this within one month of the date of the final decision.

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Final decision

40. I have completed my investigation. There was fault by the Council causing injustice which the Council has agreed to remedy.

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Investigator's decision on behalf of the Ombudsman