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 and we cannot investigate the actions of the Valuation Office Agency.

The complaint

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

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The Ombudsman’s role and powers

2. The Ombudsman investigates complaints about ‘maladministration’ and ‘service failure’, which we call ‘fault’. We must also consider whether any fault has had an adverse impact on the person making the complaint, which we call ‘injustice’. We provide a free service, but must use public money carefully. We do not start an investigation if we decide there is not enough evidence of fault to justify investigating. (Local Government Act 1974, section 24A(6), as amended, section 34(B))
3. We investigate complaints about councils and certain other bodies. We cannot investigate the actions of the Valuation Office Agency (VOA). (Local Government Act 1974, sections 25 and 34(1), as amended)

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How I considered this complaint

4. I considered information provided by Mr X and the Council. This includes the complaint correspondence. I also considered our Assessment Code.

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My assessment

5. The VOA 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 VOA can decide to increase or decrease the banding. If the VOA changes the band it tells the Council and the Council issues a revised bill. If the band has increased the Council issues a bill 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 VOA decides the rateable value for properties for business rates. If it reduces the rateable value the Council issues a refund. The law says the Council must pay interest payable at 1% below the Bank of England base rate.
7. The VOA decreased the band for a property Mr X paid council tax for. The Council issued a refund for £2488. The Council declined Mr X’s request for interest on the refund. It explained banding decisions are made by the VOA and there is no requirement for the Council to pay interest.
8. I will not start an investigation because there is insufficient evidence of fault by the Council. Government guidance recommends 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, a council is 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.
9. Mr X disagrees with the Council’s decision. We do not act as an appeal body and cannot intervene just because a council makes a decision that someone disagrees with. In addition, the Council had no choice but to charge council tax based on the banding decisions made by the VOA.
10. I cannot investigate the actions of the VOA because it is not part of the Council. Mr X could make a complaint to the VOA but I do not know if it would successful.

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Final decision

11. We will not investigate this complaint because there is insufficient evidence of fault by the Council and we cannot investigate the actions of the VOA.

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Investigator's decision on behalf of the Ombudsman