Summary: Miss B complains the Council transferred payments she made in 2016 to her council tax rather than her housing benefit account. Miss B complains that because of this error, her housing benefit overpayment was not cleared, and the Council is now chasing payment. During the investigation, the Council accepted it did not follow its procedure and has offered to write off the outstanding debt.

The complaint

1. Miss B complains the Council transferred payments she made in 2016 to her council tax rather than her housing benefit account.
2. Miss B complains that because of this error, her housing benefit overpayment was not cleared, and the Council are is chasing payment.

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The Ombudsman’s role and powers

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

4. I considered:
• Miss B’s complaint and the information she provided;
• documents supplied by the Council;
• relevant legislation and guidelines; and
• the Council’s policies and procedures.
5. Miss B and the Council’s had an opportunity to comment on a draft decision.

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What I found

Legislation and Guidance

Housing benefit recovery:

6. If the Council overpays housing benefit, the overpaid amount is recoverable unless it was due to a Council error to which the claimant did not contribute and could not have reasonably known about (Housing Benefit Regulations 2006, SI 2006/213, reg 100).
7. The overpayment is recoverable from the claimant (Housing Benefit Regulations 2006, SI 2006/213, regs 99–107).
8. The claimant can ask the council to reconsider the decision or appeal to the First-tier Tribunal. The time limit in either case is one month from the date of the decision (Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001, SI 2001/1002).

Council tax recovery:

9. Billing, collection and recovery of unpaid council tax is governed by the Council Tax (Administration and Enforcement) Regulations 1992, SI 1992/613.
10. Councils issue demand notices annually. The Council must include specified information with demand notices.
11. Councils must send the person liable for payment of council tax a reminder and a notice before taking recovery action.
12. Recovery action is through the issue of a summons and getting a liability order through the magistrates' courts.

What happened

13. This chronology includes key events in this case and does not cover everything that happened.
14. In August 2016 Miss B told the Council she was moving out of property C. The Council continued to pay housing benefit for a month after the date Miss B told it she was moving out resulting in an overpayment of housing benefit.
15. Miss B made two payments to the Council; one in August and one in September 2016. Miss B says these payments were to pay off her housing benefit overpayment. Because there was no reference attached to the payments Miss B made, the Council transferred these payments to her council tax account. This left Miss B with the outstanding housing benefit overpayment.
16. In September and November 2016, the Council sent Miss B an invoice, reminder and final notice for the outstanding housing overpayment. The Council sent these letters to property C and they were returned to the Council undelivered.
17. Miss B made two payments to the Council in January 2017 towards her outstanding council tax. Because the Council transferred the two payments Miss B made in August 2016 to her council tax account, when Miss B made these further payments her account was in credit. Miss B asked the Council to refund the money and it did so in February 2017.
18. However, she still had an outstanding housing benefit overpayment. The Council said it had no reason to check whether Miss B had any other outstanding debts when it refunded her the money from her council tax account. The outstanding housing benefit overpayment was less than the refund the Council had given to Miss B.
19. The Council classed the outstanding housing benefit overpayment as ‘official error’ and did not pursue Miss B for the debt.
20. In 2019 the Council started to try and recover outstanding debts from 2016. The Council asked the Department of Work and Pensions (DWP) for a forwarding address. The DWP had Miss B’s latest address recorded as property D.
21. Without verifying whether Miss B lived at property D, the Council passed Miss B’s outstanding housing benefit overpayment to a debt recovery agent.
22. The recovery agent wrote to Miss B at property D. Miss B contacted the Council in June 2019 to ask it to tell the debt recovery agent she did not live at property D. Miss B also sent the Council proof of the payments she made in August and September 2016.
23. The Council explained it transferred the payments she made to her council tax account. It said it could move these payments to her housing benefit account, but this would create an outstanding balance on her council tax account.
24. The Council asked the debt recovery agency to suspend action.

Analysis

25. Miss B accrued the housing benefit overpayment because the Council continued to pay her for a month after she moved out of property C. Continuing to pay Miss B was the Council’s error. Miss B made two payments at the time and believed these had repaid the overpayment. There was no reason for her to think otherwise.
26. However, the Council had transferred these payments to her council tax account leaving an overpayment of housing benefit. The Council did not check with Miss B what these payments were for, which was fault.
27. The Council wrote to Miss B at the address she told it she had left to try to recover the overpayment. The letters were returned to the Council unopened. Miss B was therefore not told of the outstanding overpayment. The Council decided the overpayment was because of a Council error and chose not to recover the debt.
28. When the Council decided to recover the debt in 2019, it did not send a reminder and a notice before taking recovery action and passing the debt to a recovery agent. Given the time that had passed, and that Miss B did not receive any of the letters the Council sent in 2016, the Council should have sent a reminder and a notice in 2019 before passing the debt to a recovery agent. Not doing so was fault.
29. Because of the Council’s fault, Miss B was pursued by a debt recovery agent for a debt she was unaware of.
30. During this investigation, the Council has accepted it did not follow its procedure and has offered to write off Miss B’s outstanding debt to remedy the fault.

Agreed action

31. Within one month of the final decision the Council will:
• write off Miss B’s outstanding housing benefit debt; and
• apologise to Miss B.
32. The Council will provide the Ombudsman with evidence that the above recommendations have been completed.

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Final decision

33. I have completed my investigation and uphold Miss B’s complaint. Miss B has been caused an injustice by the actions of the Council. The Council has agreed to take action to remedy that injustice.

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Investigator's decision on behalf of the Ombudsman