Summary: We will not investigate this complaint about the Council’s decision not to pay interest on a council tax refund. This is because there is insufficient evidence of fault by the Council.

The complaint

1. The complainant, whom I refer to as Mr X, says the Council should pay interest on a council tax refund.

Back to top

The Ombudsman’s role and powers

2. 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’. We provide a free service, but must use public money carefully. We may decide not to start an investigation if we believe it is unlikely we would find fault. (Local Government Act 1974, section 24A(6), as amended)
3. The Ombudsman investigates complaints about councils and certain other bodies. He cannot investigate the actions of the Valuation Office because it is not part of the Council. (Local Government Act 1974, sections 25 and 34A)

Back to top

How I considered this complaint

4. I read the complaint and email correspondence between Mr X and the Council. I considered comments Mr X made in reply to a draft of this decision.

Back to top

What I found

Council tax banding

5. The Valuation Office decides which council tax band a property should be in. If someone thinks their home is in the wrong band they can ask for a re-evaluation. The Valuation Office can decide to increase or decrease the band. If the Valuation Office changes the band it tells the council and the council issues a revised bill. If the band has increased the council issues a demand for arrears. The law prevents a council from asking for interest on the arrears. If the banding is decreased the council provides a refund. The law does not say a council should pay interest on the refund.
6. The Council has to charge council tax based on the banding information provided by the Valuation Office.
7. The Valuation Office decides the rateable value for properties for business rates. If it reduces the rateable value then the Council issues a refund. The law says the Council must pay interest payable at 1% below the Bank of England base rate.

What happened

8. Mr X bought a property in 2000. The Valuation Office placed the property in band F. The Council charged council tax, as instructed by the Valuation Office, for band F. Mr X says he thought the council tax was high and made a query to the Valuation Office. Mr X says the Valuation Office did not respond. Mr X was abroad and did not follow it up.
9. Mr X sold the property in 2019. In 2020 the Valuation Office placed the property in a lower band from 2000. The Council gave Mr X a council tax refund of £5723. Mr X asked the Council for interest on the refund. The Council declined because there are no council tax regulations which allow for interest to be added to the refund.
10. Mr X says the Council should make good its error and it is unjust for him not to receive interest on the refund.

Assessment

11. I will not start an investigation because there is insufficient evidence of fault by the Council. Government guidance recommends that councils pay refunds going back to 1993, if applicable. But, there is no legislation, or guidance, which says a council must pay interest on a refund. Conversely, councils are prevented from charging interest on arrears and the law says it must pay interest on refunds for some business rates. It is reasonable to expect that if Parliament had intended councils to pay interest on council tax refunds then it would have included this in the regulations. But, there is no such requirement.
12. In addition, it was the Valuation Office, not the Council, which placed the property in band F and the Council had to charge council tax based on the information from the Valuation Office. The Council has not made an error so there is nothing for it to make good.
13. The Valuation Office is not part of the Council so I cannot investigate why it put the property in band F or ask it to pay interest. Mr X could make a complaint to the Valuation Office.

Back to top

Final decision

14. I will not start an investigation because there is insufficient evidence of fault by the Council.

Back to top

Investigator's decision on behalf of the Ombudsman