The Ombudsman's final decision:
Summary: Mr J complains the Council is trying to enforce an old council tax debt. He says this is unfair, as he cannot now prove he cleared the debt. The Council notes there is no legal time limit on council tax debt enforcement. Our view is the Council was at fault, as it cannot demonstrate it tried to trace Mr J in the intervening years. It is not fair for the Council to now collect the debt when its own delay has prevented Mr J from being able to challenge it. The Council has accepted our recommendations to not pursue the debt. So we have completed our investigation.
- The complainant (whom I shall refer to as Mr J), complains the Council:
- is enforcing a historic council tax debt, despite not having been in contact with him about the debt for many years;
- has not been able to provide him with a breakdown of the account that deals with discrepancies in its accounting. Mr J says he believes he had settled the debt;
- has an unfair complaints process, as both stages were looked at within the same department.
The Ombudsman’s role and powers
- 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)
- 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)
How I considered this complaint
- As part of the investigation, I have:
- considered the complaint and the documents provided by Mr J;
- made enquiries of the Council and considered its response;
- spoken to Mr J;
- sent my draft decision to Mr J and the Council and considered their responses.
What I found
Legal and administrative background
- Council tax is a tax made on domestic properties. Councils issue one bill to each household. Residents of dwellings, including tenants, are usually liable for council tax from the date they moved into the property.
- Where a sum of council tax is unpaid, a council may seek an order from the magistrates’ court known as a liability order. This confirms the amount owed and who is liable to pay it. When a liability order has been made, a council has several alternatives available to pursue the debt. One option is to instruct enforcement agents. (Regulation 45 of the Council Tax (Administration and Enforcement) Regulations 1992)
Recovery of debts
- The Limitation Act gives a creditor a set amount of time to recover a debt. For unsecured debts, the time limit is six years, from the last time a debtor acknowledged a debt or made a payment. If a creditor does not take court action within that time the debt becomes unenforceable (it is ‘statute barred’).
- Case law has clarified there is no time limit to recovery action on council tax debt, once a liability order has been granted; the Limitation Act 1980 does not apply. So taking action years after a liability order has been granted is lawful. Whether it is reasonable to do so is a matter the Ombudsman can consider.
The Council’s complaints procedure
- The Council’s complaint procedure says its first stage is an investigation by a senior manager. Its second stage is a review by a more senior manager.
- The Ombudsman’s guidance: ‘Effective Complaint Handling for local authorities’ says (for complaints that do not fall under a statutory process) it is for each council to decide how to respond to complaints. We say there is no right or wrong procedure.
- In 2010, a property Mr J owned was repossessed (Address 1). At the time of repossession, Mr J had significant arrears of council tax. In 2010 a magistrates’ court had granted a liability order for that debt.
- Mr J says in 2010, and during the whole time since then, he has lived at another address in the Borough. He pays council tax at this address (Address 2) and the Council had sent enforcement agents to that address to enforce Address 1’s debts.
- In the time after the repossession, Mr J made a repayment arrangement with the Council for the arrears. The Council’s records say Mr J’s last payment was in early 2013, after which it says Mr J defaulted on the payment arrangement. Mr J says his memory is he had cleared the arrears. But it is hard for him to now prove this; in particular, as many of his payments were in cash.
- In October 2019, the Council wrote to Mr J demanding payment of outstanding debt from the 2010 liability order for Address 1.
- For the rest of 2019 and into 2020 Mr J and the Council were in correspondence about the council tax debt. In February the Council sent the debt to its enforcement agents.
- In August Mr J complained that:
- he did not know how the Council expected him to prove he had paid when it had not contacted him for so long;
- the Council should not have sent the debt to the enforcement agents when it had not answered all his questions, or provided him with calculations about the claimed outstanding amount.
‘…recently been given extra resources and new technology to investigate accounts which have been returned from an Enforcement Agent with debt still outstanding. Historically we have not had the resources. It was this process which prompted a forwarding address and the bill to be sent to Mr [J]. The Royal Borough of Greenwich has a duty to pursue arrears to ensure as much funding for public services is collected as possible. This duty continues regardless of the time that has elapsed.’
- The Council did not send me any records about any attempts to trace Mr J at any point.
The delay in taking enforcement action
- The Ombudsman’s view is councils have a right to collect debts owed to them. The court establishes objectively whether the person is liable. And caselaw has clarified, once the court has done this, there is no time limit of a council’s ability to enforce a debt.
- But councils need to do this fairly, considering the debtor’s rights. They need to decide whether it is appropriate, in all of the circumstances, to pursue the debt.
- There will be many times when it is appropriate for a council to enforce a historic debt; for example when it has been trying, but has not succeeded, in tracing a debtor. But that is not what happened here. Mr J has lived in the Borough for the whole period since the liability order the Council is trying to enforce. Indeed he tells me he pays council tax for Address 2.
- The Council is at fault as it delayed taking action to trace Mr J. It took no action on the account for around six years. I acknowledge the Council’s explanation of setting up a new team to ‘chase absconders’. But Mr J had not absconded – he has lived in the Borough, at Address 2, for the entire period.
- Mr J says the Council’s delay in enforcing this debt means he cannot now provide proof that, as he maintains, he paid the council tax at the time. Passage of time will inevitably make it difficult for a person to challenge a debt, as supporting evidence (ie of payment) may no longer be available. That would put a complainant at a significant disadvantage. It cannot be fair for the Council to collect the debt when its own delay has prevented Mr J from being able to challenge it.
The Council’s complaint response
- Mr J disagrees with the way the Council responded to his complaint. The Ombudsman is not prescriptive on how councils organise their complaint responses. So it is not for us to criticise the Council’s procedure. As the Council has followed its own procedure, there was no fault in its complaint response.
- I recommended that, within one month of my final decision, the Council write off the debt and associated charges that Mr J is disputing.
- I recommended that, within three months of my final decision, the Council review its council tax collection policy to ensure the Council considers if it is fair to pursue a historical debt when the passage of time may prevent a person from being able to challenge the debt. The Council should explain to us the action it has taken to improve its practice in this area.
- The Council responded to say it had no comments on my draft decision.
- I uphold the complaint. The Council has agreed to my recommendations, so I have completed my investigation.
Investigator's decision on behalf of the Ombudsman