Summary: Ms X and Mr Y complained the Council failed to start billing them for council tax when they moved back into their refurbished property, causing a debt to build up over four years. The Council did not follow the correct process when Ms X and Mr Y told it they had moved back into the property. The resulting debt caused them avoidable stress and financial pressure, for which the Council agreed to apologise and pay a financial remedy. It also agreed to restate its offer of a repayment plan and remind its staff of the correct process.

The complaint

1. Ms X and Mr Y complained the Council failed to correctly bill them for council tax between October 2016 and March 2021. They said the Council:
• failed to ask the Valuation Office Agency (VOA) to relist their property after they finished renovating it in October 2016;
• did not tell them to contact the VOA at the time, as it now claims; and
• should have realised sooner that it was not sending them council tax bills.
2. Because of this, Ms X and Mr Y said the Council asked them to pay council tax arrears of over £11,000, which caused financial hardship. They wanted the Council to accept responsibility for not billing them for several years and write off some of the debt.

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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. The Local Government Act 1974 sets out our powers but also imposes restrictions on what we can investigate.
5. 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)
6. 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

7. I considered:
• information provided by the complainants;
• documentation from the Council about the complainants’ council tax account and complaint, including copies of bills and reminder notices;
• relevant law and guidance, and;
• the Ombudsman’s Guidance on Remedies.
8. Ms X, Mr Y, 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 for refurbished properties

9. Councils issue completion notices for properties that are new or have had substantial structural changes. The notice lets the property owner know the date when a council thinks the works are finished or will be substantially finished. From this date, the property will be liable for council tax.
10. Councils have the power to:
• issue a completion notice to a building’s owner when it comes to their attention that works on the building are complete, and;
• supply a copy of this notice to the valuation officer.

(Local Government Finance Act 1988, schedule 4A, and Local Government Finance Act 1992, section 17, as amended)

11. Government guidance about council tax for refurbished properties says councils:
• are responsible for telling homeowners when they will have to start paying council tax again following completion of major home improvements on an empty property. Councils should issue a completion notice telling them the date that payments will start; and
• should send the Valuation Office Agency (VOA) the information it needs to allocate a council tax band.

The Council’s policy

12. The Council publishes guidance on its website about how to register new build and converted properties for council tax. This guidance sets out what happens when building works or renovations are finished:
1. Property owners should tell the Council in writing or email the Council’s inspection team once works to a property are complete.
2. The Council will then inspect the property and send the property owner a completion notice including the property’s completion date.
3. The VOA then sets the property’s council tax band which brings the property into the Council’s valuation list.
4. The Council then issues a bill to the property owner, confirming council tax liability effective from the property completion date.

What happened

13. In March 2016, Ms X and Mr Y moved out of their home so refurbishment works could take place. Ms X rang the Council in April 2016 to tell it the property was uninhabitable during the building works. Council records said it told her to contact the VOA to get the property removed from the council tax list. In June 2016, the Council issued a council tax refund for tax already paid during the uninhabitable period.
14. In October 2016, Ms X and Mr Y moved back into their home and Ms X told the Council six days later. Council records said it told her to contact the VOA which would need to set the property’s council tax band for the Council to bring it back onto the council tax list. Ms X and Mr Y disagreed the Council told them this.
15. Ms X and Mr Y tried to access their online council tax account in November 2020 to get a copy of their latest council tax bill and could not do so. Mr Y said he then spoke to the Council which told him to contact the VOA first to set the council tax band so the Council could re-list the property. The Council does not have a record of this phone call.
16. Mr Y said the VOA then told him it would need a report from the Council before it could set the property’s council tax band, so he should first contact the Council. In early December 2020, Ms X and Mr Y phoned the Council. Mr Y had not previously been named on the account, so the Council added him at this point. The Council told them it would set up a new council tax account for the property. Mr Y also emailed the Council’s ‘inspectors team’ a few days later explaining the situation and the response he received from the VOA.
17. In early January 2021, Council records showed it “issued [an] inspection” to confirm the property was complete and should be brought back into the council tax list. The Council said it then reported this to the VOA.
18. In March 2021, the Council issued council tax bills to Ms X and Mr Y for the period from October 2016 to March 2021. Ms X and Mr Y disputed they should pay the bills for this period, and as these went unpaid the Council sent further reminder notices. All bills and notices the Council sent stated Ms X and Mr Y should contact the Council if they could not afford to pay the bills on the dates specified. The Council reiterated its offer to arrange a repayment plan during the complaints process. Ms X and Mr Y said they decided to pay in full for October 2016 to March 2019 to avoid the Council taking court action.

My findings

The Ombudsman’s jurisdiction

19. As the unpaid council tax dated back to 2016, I considered whether parts of the complaint were late, as described at paragraph 5. I am satisfied the complainants only became aware of the issues in late 2020 and then promptly contacted the Council. Ms X and Mr Y came to the Ombudsman within 12 months of becoming aware of the issues, therefore, their complaint about this was not late.

Notification to the VOA

20. As described at paragraphs 9, 10, and 11, for a new build or refurbished property the homeowner should let the Council know when works are complete. The Council then has powers to inspect the property, issue a completion certificate, and inform the VOA. As described at paragraph 12, the Council’s website also confirmed this process. Ms X told the Council they had moved back into the property in October 2016, within a week of doing so. The Council should have told its inspection team at the time or told the complainants to do so according to the information on its website, to begin the relisting process. Instead, the Council wrongly told the complainants they had to contact the VOA themselves. This was fault.
21. Mr Y said when he realised there was an issue in November 2020, the Council again told him to contact the VOA. The Council’s position in its complaint response was that it was Ms X and Mr Y’s responsibility to contact the VOA at this stage. However once Mr Y told the Council the VOA had said it needed a report from the Council, it confirmed the property was complete and reported completion to the VOA. The property was brought back onto the council tax list because of the Council’s notification to the VOA, not the complainants’ contact with the VOA. This further confirms the Council was wrong to tell the complainants to contact the VOA. I am satisfied the Council’s advice to the complainants in late 2020 to contact the VOA was fault.

Impact on the complainants

22. Council tax would always have been due for the period in question, regardless of when the Council billed Ms X and Mr Y for this. Therefore, I do not consider the Council should write off the debt. However, had the Council followed the correct process in 2016, it would have recorded the property completion date correctly and then billed the complainants each year as normal. Its failure to properly record the completion date until late 2020 resulted in build-up of a significant council tax debt. I consider this debt caused financial pressure and stress to the complainants, which could have been avoided if the Council had followed the correct process in 2016. Therefore, I consider a financial remedy is due for the stress and inconvenience caused to Ms X and Mr Y.
23. When deciding the impact of this stress and inconvenience, I took into account that the complainants did not tell the Council they were not paying council tax for four years. It is reasonable to expect them to have noticed this earlier. As explained in the next section, Ms X and Mr Y could have reduced the financial pressure when it arose by taking up the Council’s offer of a repayment plan. They did not do so. I have also taken this into account when deciding on a suitable remedy.

Repayment terms

24. Ms X and Mr Y said they were unclear on the repayment terms for the debt, and paid half the debt on a credit card as they were concerned about court action. However, all bills and recovery notices the Council sent to the complainants told them to contact the Council if they could not afford to pay the bills on the scheduled dates. They did not do so and instead wrote to the Council in May 2021 to dispute they should have to pay the debt, and then put in a complaint. The Council repeated its offer to agree a repayment plan during the complaints process. Therefore, there is no evidence of fault in how the Council decided on its repayment schedule when it was pursuing the debt.

Agreed action

25. Within one month of my final decision the Council will:
1. Apologise to Ms X and Mr Y for the faults identified, including an explanation of steps taken to improve its services and prevent this happening in future.
2. Pay the complainants £150 each to recognise the stress and financial pressure caused by the council tax debt, which was in part due to the Council’s failure to follow the correct process in 2016.
3. Offer to arrange affordable repayments for the remaining council tax debt, based on an assessment of Ms X and Mr Y’s income and expenditure.
26. Within three months of my final decision the Council will remind staff who action council tax changes, or answer queries on council tax from the public, of the correct process for reporting completion of new build, converted, or refurbished properties to the VOA.

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Final decision

27. I have completed my investigation and uphold this complaint. There was fault in that the Council did not follow the correct process to ensure it billed Ms X and Mr Y for council tax when they moved back into their refurbished property. This caused them avoidable stress. The Council agreed to our recommendations to remedy this injustice.

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Investigator's decision on behalf of the Ombudsman