Summary: Miss X complains the Council wrongly holds her liable for council tax for the period March 2015 to October 2019 in relation to a property she owned but did not live in. She also complains the Council has failed to communicate with her or respond to her complaints and has wrongly taken enforcement action against her. The Council’s failure to respond to Miss X’s complaint in line with its complaint process and notify of her appeal rights amounts to fault. The Council’s offer to complete the complaints process and provide Miss X with her appeal rights is an appropriate response.

The complaint

1. The complainant, whom I shall refer to as Miss X complains the Council wrongly holds her liable for council tax for the period March 2015 to October 2019 in relation to a property she owned but had rented to a tenant. Miss X was unaware the Council held her responsible for this council tax until July 2019 when the Council tried to stop her selling her house to attach a charging order.
2. Miss X complains the Council has failed to communicate with her or respond to her complaints and is now trying to make her bankrupt.

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The Ombudsman’s role and powers

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. As part of the investigation, I have:
• considered the complaint and the documents provided by Miss X;
• made enquiries of the Council and considered the comments and documents the Council provided;
• Miss X and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

Council tax recovery

6. Before a council can pursue someone for council tax it must send a demand. If a taxpayer misses a payment, the council must issue at least one reminder notice before issuing a summons for a liability order in the magistrates’ court. If the council has a liability order and the debtor does not pay the council can recover the debt.
7. There are several ways a council can recover the debt. These include referring the debt to enforcement agents, putting a charge on the tax-payer’s home, and starting bankruptcy proceedings. A council can only take one action at a time. (Council tax (Administration and Enforcement) Regulations 1992 Regulation 52)
8. A council can start bankruptcy proceedings if it has liability orders for a council tax debt of more than £5,000. The first step is to serve a statutory demand, explaining the debt that is being recovered. A debtor can ask the county court to set the demand aside on specified, limited grounds (for example that the debt is not owed).

The Valuation Tribunal

9. The Valuation Tribunal is an independent body whose decisions are binding on the Council. The Tribunal deals with appeals against decisions on council tax liability and council tax support or reduction.

What happened here

10. Miss X owned Property 1 but states she had not lived there for a number of years. Miss X rented out Property 1 and in March 2019 issued proceedings to recover possession so that she could sell Property 1.
11. Miss X states she was unaware there was outstanding council tax due for Property 1 or that the Council had made her liable for this until she received a county court order for recovery in July 2019.
12. The Council attempted to obtain a charging order on Property 1, but this was not possible as Miss X sold the property in October 2019. The Council then arranged to serve a statutory demand on Miss X.
13. Miss X complained to the Council in December 2019. She asked for the debt of £6354.82 to be set aside. In its response, the Council confirmed it had made Miss X and Mr Y liable for council tax on the grounds they were owner occupiers. The Council advised Miss X it had issued demand notices and reminders and subsequently obtained liability orders dated 29 April 2019 and 15 July 2019.
14. The Council advised Miss X that if she believed the liability orders were wrongly issued, she could apply to the Magistrates Court to set them aside. Miss X was unhappy with the Council’s response and asked the Council to review her complaint at stage two of its complaints procedure. The Council acknowledged but did not respond to Miss X’s complaint at stage two.
15. Miss X has not applied to set aside the liability orders but did apply to set aside the interim charging order on Property 1. The Court has since discharged the interim charging order. The liability orders remain in place.
16. Miss X maintains she is not liable for the council tax on Property1 and has asked the Ombudsman to investigate the Council’s actions in pursuing her. In response to my enquires the Council states it initially held Miss X’s daughter, Miss Z liable for council tax at Property 1 for the period 1 March 2015 to 29 October 2019. Miss Z had informed the Council she was renting Property 1 from Miss X, and that she was not related to her.
17. In 2018 as part of its enquiries to confirm who lived at Property 1 with Miss Z, the Council identified Miss X and Mr Y as owners, but were unable to confirm Miss X lived at Property 2, the address given on the tenancy agreement. The Council carried out credit checks in January 2019 which identified Miss X’s address as Property 1. It also confirmed Miss Z was Miss X’s daughter.
18. The Council determined Miss X and Mr Y were liable for council tax as owner occupiers from 1 March 2015 and in December 2018 sent them a demand notice to Property 1 for £5233.95. The Council sent a reminder in February 2019 and in March 2019 issued a summons. The Court then issued a liability order in April 2019. The Council states that as Miss X did not make any payments it sent a letter warning of enforcement action in May 2019.
19. In March 2019, the Council also sent Miss X a demand for council tax for the 2019/2020 in the sum of £1512.12. It then sent a reminder in April 2019 and issued a summons in June 2019. The Court issued a liability order in July 2019 and the Council warned Miss X of enforcement action.
20. The Council states that as Miss X had not made any payments towards the council tax arrears it considered a charging order against Property 1 was the most effective recovery method. This would not have actively recovered the debt but would have secured payment in the event Property 1 was sold. The Council obtained an interim charging order but had not put a restriction on the Land Registry or obtained a final charging order before Miss X and Mr Y sold property 1.
21. In December 2019, the Council found Miss X now had credit links to Property 2. It sent a demand notice to Miss X at Property 2 for £6354.62. The Council states it considered Property 2 was a relative’s address and decided against taking enforcement action. In early 2020 the Council instructed solicitors to begin bankruptcy proceedings and serve a statutory demand. Due to the passage of time, it then served a further demand notice in September 2020. The Council states Miss X currently owes £7,284.62.
22. The Council acknowledges it has not responded to Miss X’s complaint at stage two of its complaints procedure. It remains of the view that Miss X is liable for the council tax as owner occupier but would like the opportunity to provide a stage two response. The Council states that within the stage two response it will provide appeal rights to the Valuation Tribunal Service (VTS). This will allow Miss X to challenge the Council's decision that she is liable for council tax on Property 1. The Council has asked its solicitors to hold any further action and not apply for the bankruptcy petition. It would continue this hold to allow Miss X to submit an appeal. The Council will ask that Miss X submit an appeal to the VTS within 14 days of its stage two response and that she provides evidence of her appeal.

Analysis

23. The Council has a duty to collect council tax. If someone does not pay their council tax the Council can take action to recover the money. This includes instructing recovery agents, putting a charge on the tax-payer’s home, and starting bankruptcy proceedings. The Council has followed the correct process in issuing demands, reminders and summons, and in obtaining liability orders.
24. However, Miss X disputes that she is liable for council tax on Property 1 and asserts that the enforcement action is therefore unwarranted. The Ombudsman cannot resolve disputes regarding council tax liability, this is the role of the Valuation Tribunal Service.
25. The Council advised Miss X how to apply to set aside the liability orders it had obtained but did not notify her of her right to appeal to the Valuation Tribunal. I consider the failure to advice Miss X of her right of appeal amount to fault.
26. To redress this the Council has offered to respond to Miss X’s stage two complaint and provide her appeal rights. It has also placed recovery action on hold. This is an appropriate course of action.
27. It is unclear what the outcome of Miss X’s appeal to the Tribunal would be, so I am unable at this stage to say whether Miss X has suffered an injustice as a result of the delay in informing her of her appeal rights. Should Miss X successfully appeal her liability for council tax I would expect the Council to consider whether the failure to notify Miss X of her rights earlier has caused her an injustice. If the Council determines it has, it should take action to redress this.

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Agreed action

28. The Council has now responded to Miss X’s complaint at stage two of its complaints process and provided her appeal rights to the Valuation Tribunal Service.
29. Should Miss X successfully appeal her liability for council tax the Council will considers whether the failure to notify Miss X of her rights earlier has caused her an injustice. If the Council determines it has, it should take appropriate action to redress this within two months of the tribunal decision.

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Final decision

30. The Council’s failure to respond to Miss X’s complaint in line with its complaint process and notify of her appeal rights amounts to fault. The Council’s offer to complete the complaints process and provide Miss X with her appeal rights is an appropriate response.

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Investigator's decision on behalf of the Ombudsman