London Borough of Croydon (21 009 512)

Category : Benefits and tax > Council tax

Decision : Upheld

Decision date : 29 Mar 2022

The Ombudsman's final decision:

Summary: Mrs X complained about the Council using her old address when recovering unpaid council tax. We found the Council at fault in continuing to use the old address although its council tax correspondence was ‘returned to sender’. Use of the old address led to added recovery costs on the council tax debt, which Mrs X had to pay. To put matters right the Council agreed to refund the council tax recovery costs of £495.50 to Mrs X.

The complaint

  1. Mrs X complained about the Council taking enforcement action to recover unpaid council tax on a property she once owned, because it:
  • failed to write to her about the unpaid council tax using her current address; and
  • failed to respond to her messages asking for information about paying the council tax.
  1. Mrs X said what happened caused her much stress and inconvenience. Mrs X wanted the Council to refund the recovery costs and pay her £200 compensation.

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The Ombudsman’s role and powers

  1. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
  2. 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)
  3. 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

  1. I:
  • considered Mrs X’s written complaint and supporting information;
  • considered the Council Tax (Administration and Enforcement) Regulations 1992;
  • considered the Government’s ‘Council Tax Guidance to local councils on good practice in the collection of Council Tax arrears’;
  • asked for and considered the Council’s comments and supporting papers about the complaint;
  • shared the Council’s response to the complaint with Mrs X; and
  • shared a draft of this statement with Mrs X and the Council and considered any comments received before making a final decision.

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What I found

Background

  1. Council tax is a combination of tax on the value of a property and a tax on individuals that is payable by the occupier or owner.
  2. The council tax bill for the year is due on 1st April. A council will usually collect payment through monthly instalments. If any instalment is missed the council will send the liable person a reminder. If a payment is still not made or a further payment missed, then the entire outstanding balance will be due (that is the full amount for the rest of the year).
  3. To use the various powers available to it to recover unpaid council tax, a council has to apply to the Magistrates Court for a liability order against those it believes are liable. Once a council has obtained a liability order it can take recovery action.
  4. A liability order gives councils legal powers to take enforcement action to collect the money owed, which can include using enforcement agents or ‘bailiffs’. Enforcement agents will add their costs to the debt.

What happened

  1. In 2015, Mrs X bought a property (‘the Rental Property’) as joint owner with Mr X, which they let to tenants. The Council recorded Mr X as owning the Rental Property and his correspondence address as his, and Mrs X’s, then home (‘the First Property’). When there was no tenant living at the Rental Property, the Council sent council tax bills to Mr X addressed to the First Property. The Council said its records did not show anyone asking to add Mrs X to the council tax account for the Rental Property.
  2. The Council’s council tax account for the First Property was in a name similar, but not identical, to Mrs X’s name. In 2019, Mrs X sent the Council an online ‘moving out’ form for the First Property. The form did not refer to Mr X. The Council’s online system highlighted the name on the moving out form differed from that on the council tax account for the First Property. The moving out form provided a new address (‘the Second Property’) for Mrs X. Both Mrs X and Mr X moved from the First Property to the Second Property in 2019.
  3. In 2020, Mr and Mrs X’s tenant moved out of the Rental Property, which remained empty for about nine months before they sold it to a third party. The Council received a ‘moving out’ form from the tenant of the Rental Property. The form gave Mr X’s name as the landlord of the Rental Property and his telephone number. The Council’s online system automatically created a council tax account in Mr X’s name for council tax due after the tenant left the Rental Property. The tenant’s moving out form did not give an address for Mr X and so the Council used his last known correspondence address, which was the First Property. The Council sent Mr X a council tax bill for the Rental Property addressed to him at the First Property.
  4. The council tax bill for the Rental Property sent to Mr X at the First Property was not paid. The Council sent Mr X a payment reminder using the First Property address. About two months later, the reminder letter was returned to the Council marked ‘addressee gone away’.
  5. The Council said as part of its periodic review of ‘return to sender’ cases, it considered Mr X’s council tax account for the Rental Property. The Council said it found nothing on the file suggesting an alternative or current address for Mr X.
  6. The Council then issued bills for the council tax year April 2021 to March 2022. It sent Mr X a council tax bill for the Rental Property using the First Property address. The bill was returned a few weeks later marked ‘addressee gone away’.
  7. The Council continued to write, including sending a court summons, to Mr X at the First Property seeking payment of council tax for the Rental Property. The Council eventually got a liability order from the courts for the unpaid council tax, adding its costs to the amount payable.
  8. The Council passed the council tax account for the Rental Property to enforcement agents for recovery of the unpaid council tax. The enforcement agents added their costs to the amount payable.
  9. Meanwhile, Mrs X said she had been telephoning the Council about paying council tax for the Rental Property. Mrs X said the phone lines were always busy, with long queues. Mrs X said she also made several visits to the Rental Property to collect letters, including any from the Council. Mrs X said she also used the Council’s website to seek information but received no response. Mrs X then used the Council’s online system to complete a ‘direct debit’ for payment of council tax.
  10. The Council’s system rejected the direct debit application as the council tax account for the Rental Property was in Mr X’s name, not Mrs X’s. A Council officer reviewed Mrs X’s direct debit application, which included her email address. The officer emailed Mrs X asking that she get in touch.
  11. In the contact that followed, Mrs X paid the council tax for the Rental Property but refused to pay the added costs saying she had repeatedly tried to pay the council tax. Mrs X questioned why the Council sent letters to the First Property after she told it in 2019 that she and Mr X had moved to the Second Property. Mrs X pointed out the Council would have been receiving council tax payments from the people now living in the First Property. She also asked why the Council had not linked her contacts about the First Property with Mr X when they shared the same second name. Mrs X also asked why the Council could not have phoned or emailed her, or Mr X, given it had those details.
  12. In response, the Council said the council tax account for the First Property had been in Mrs X’s previous name and Mr X’s name was not on that account. Mr X had given the First Property as his correspondence address for the Rental Property six years earlier. It had no record anyone had asked it to update that information for the Rental Property council tax account. It had therefore correctly written to Mr X at the First Property when seeking payment of council tax for the Rental Property.
  13. The Council also said the moving out form was clear that information provided related to the property moved from and that moved to. The form did not cover any other properties the person completing the form might have links to. It used post for council tax correspondence and did not have systems for billing by email. The Council agreed its telephone lines had been busy but said it had no records of online contact from Mrs X other than her direct debit application. The Council sought payment of the outstanding costs to avoid further enforcement action.
  14. Mrs X was dissatisfied with the Council’s response but, to avoid further enforcement action, paid the outstanding costs and then brought her complaint to the Ombudsman.

Consideration

  1. The council tax accounts for the Rental Property and First Property at the centre of this complaint were in different names and neither name was ‘Mrs X’. And the council tax account for the First Property did not name Mr X. However, the First Property was the given correspondence address for Mr X for the council tax account for the Rental Property. This meant it was the address the Council should use to contact Mr X about the Rental Property council tax account. Mrs X’s 2019 ‘moving out’ form for the First Property did not refer to Mr X. So, the Council had no reason to stop using the First Property address when contacting Mr X about council tax for the Rental Property after receiving Mrs X’s moving out form. I therefore did not find the Council at fault for not linking the council tax accounts for the First and Rental Properties or changing Mr X’s correspondence address for the Rental Property in 2019.
  2. However, from late 2020, when its council tax correspondence was first ‘returned to sender’, the Council had evidence Mr X was no longer linked to the First Property. The Government’s good practice guidance about collecting council tax arrears refers to ‘avenues’ councils may use before taking legal action. Paragraph 2.3 of the guidance gives as an example information available through a council’s own systems. And paragraph 3.5 says councils “should take all reasonable steps to exhaust other options available to them prior to obtaining a liability order”.
  3. Here, the Council said it reviewed the Rental Property account after its letter to Mr X was ‘returned to sender’ but identified no alternative address for him on the file. Reviewing the account was a suitable step to take. And, I have no reason to doubt the file provided no other address for Mr X. However, the Council had, at least, a telephone number for Mr X as set out in the Rental Property tenant’s 2020 moving out form. I saw no evidence the Council tried to contact Mr X using the given telephone number to get information about his current address. Such a step would have been reasonable, practical, timely and inexpensive.
  4. And, if the Council had doubts about Mr X’s links with the First Property because only some correspondence was ‘returned to sender’, it had, for example, access to its electoral roll. The Council would have been able to check, using information it held, the names of those known to be living at the First Property in 2020.
  5. Overall, the Council did not take adequate steps to locate Mr X before starting recovery action for unpaid council tax on the Rental Property. Rather, despite holding evidence Mr X was no longer linked to the First Property, it pursued formal action, including sending a court summons to him at that address. Based on the evidence, I found the Council failed to meet acceptable administrative standards and acted with fault in pursuing recovery action using the First Property address.

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Agreed action

  1. I found the Council at fault in taking recovery action knowing its correspondence would not be received by Mr X at the First Property. I had no reason to doubt that Mrs X (and or Mr X) would have paid council tax for the Rental Property if they had received the relevant council tax bills. So, I found the injustice to Mrs X arising from the Council’s fault was having to pay recovery and enforcement costs totalling £495.50. The Council agreed my recommendation that it refund £495.50 to Mrs X within 20 working days of this decision statement and send the Ombudsman evidence of that payment.

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Final decision

  1. I completed my investigation, finding fault causing injustice, on the Council agreeing the recommendation at paragraph 30.

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Investigator's decision on behalf of the Ombudsman

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