Summary: The complainant received demands for business rates owed by her company and the previous occupant of her business premises. In confusion the complainant mistakenly paid the demand for the previous occupant’s business rates. Quickly realising her mistake, the complainant asked the Council to refund her payment. The complainant says the Council took too long to refund the payment causing inconvenience compounded by paying the refund in two parts. The complainant wants the Council to pay interest on the refund and her solicitor’s costs. The Council says it acted properly in refunding the payment and refused to pay interest or the solicitors’ costs. The Ombudsman finds the Council at fault in handling the refund.

The complaint

1. The complainant whom I refer to as Mrs X says the Council wrongly sought payment for business rates on property Mrs X did not occupy at the time the business rates arose. Mrs X not realising the Council’s error paid the bill. Mrs X says the Council took too long to recognise its error and refund her payment. Mrs X says she had to engage a lawyer to take up her case with the Council causing her further expense. Mrs X wants the Council to pay her legal costs and interest on the refund.
2. Mrs X says a payment of over £33,000 represents a significant amount for her to be without while awaiting a refund. The Council has refused her application for a refund, interest on the refund and Mrs X’s legal fees.

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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. If 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

5. In considering this complaint I have:
• Contacted Mrs X through her representative and studied the information provided in her complaint;
• Put enquiries to the Council and reviewed its response;
• Researched relevant law, guidance and policy
• Shared with Mrs X’s representative and the Council a draft decision and reflected on comments received resulting in revisions to the remedy.

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What I found

6. Mrs X occupies business property I shall refer to as Unit A trading as Company Q. Previously a company I shall refer to as Company Z traded from Unit A. Mrs X has no connection with Company Z. In April 2018 Company Q told the Council it had occupied Unit A since January 2018 and so it now had liability for business rates.
7. Company Z did not pay all the business rates for the period it occupied Unit A. The Council tried to recover the debt by following its usual debt collection procedure. It issued bills and reminders to the last known addresses of the company personnel. This included Unit A.
8. The Council did not receive any responses from Company Z. Therefore, it engaged enforcement agents to trace and recover the debt from Company Z. The Council’s records show an address in Nottingham for Company Z as well as Unit A. It sent notices to both addresses but did not receive any reply.
9. On 24 May 2018 the Council’s agents issued a notice of enforcement for the business rates to Company Z giving Company Z’s Nottingham address. The Notice said Company Z must pay the debt by 2 June 2018 before 5.30 p.m. The Notice says that if the recipient does not pay “…an enforcement agent will visit you and may seize your belongings…These belongings may then be sold to pay what you owe. These actions will increase the costs of enforcement and these costs will be added to the amount already owed.”
10. The notice explains that if not paid by the date and time set out in the Notice then the enforcement agent may add fixed fees.
11. Having received Company Q’s notice of occupation, the Council also sent a business rates bill to Company Q at Unit A. This resulted in Mrs X receiving both Company Q’s business rates bill and Company Z’s business rates notice within a short time. This led to confusion.
12. Faced with a visit and letter from the enforcement agents Mrs X believed the Council to be chasing her for Company Q’s business rates. Fearing the enforcement agent might remove goods to the value of the bill Mrs X paid the demand not for Company Q but Company Z. The Council says it received payment by bank transfer following a telephone conversation with Mrs X.
13. The Council’s records show its enforcement agents received a payment marked from Company Q on 4 June 2018, not Company Z who owed the debt.
14. Mrs X quickly realised her mistake and contacted her solicitors to recover the payment. Mrs X contacted her solicitors because the Council had engaged enforcement agents who hand delivered the demand for payment to Unit A. Fearing possible seizure of her goods as set out in the Notice Mrs X did not feel she could deal with the Council direct.
15. On 4 June 2018 Mrs X’s representative asked the Council to refund the payment. Mrs X says the Council recognised the mistake and confirmed it would immediately refund her payment. When that did not happen, Mrs X’s representatives wrote to the Council on 11 June 2018 to follow up the refund.
16. On 19 June 2018 the Council asked Mrs X to provide proof she had paid. Mrs X returned the refund form and proof of payment on 21 June 2018.
17. The Council’s business rates section refunded the business rates to Mrs X on 4 July 2018 paying £30,599.72. It asked its agents to refund the costs the enforcement agents had added to the bill. The enforcement agent repaid to Mrs X the costs of £2,493.28 on 25 July 2018. The Council’s agents apologised for issuing a wrongly addressed cheque on 23 July 2018 and for the delay in refunding the costs charged. In commenting on my draft decision, the Council explains the Enforcement Agents are responsible for this delay, not the Council. It had already paid the bulk of the repayment.
18. Meanwhile Mrs X’s representative wrote to the Council on 5 July 2018. He called on the Council to pay interest at £7.25 per day until paid. By 5 July 2018 that totalled £224.75. The representative also asked the Council to pay his costs which currently stood at £1,078.00.
19. The Council’s enforcement agents say they did not have a discussion at Unit A, but handed the Notice to Mrs X. While the Notice contains information saying the enforcement agent may remove goods, the enforcement agent denied making any direct threat to remove goods. The Council says when its enforcement agents visit businesses, they ask those present if they represent the company liable for the debt. If they say no, the enforcement agents will ask those present to prove that. Similarly, they will ask those present to prove that goods in the building belong to them and not the company liable for the debt. The Council says it acted correctly in delivering the enforcement notice to the premises to which it related. The Council had addressed the enforcement notice to the correct company in line with current debt collection guidelines.
20. The Council says it refunded the costs within a month of Mrs X’s payment while its enforcement agents took a little longer. The Council says it made no mistake. The Council argues its agents accepted a payment from Mrs X who quoted the reference on the Notice left at Unit A. The Council says it therefore correctly assumed Mrs X intended to pay Company Z’s debt.
21. The Council says because it had not acted with fault it had not instructed its Enforcement Agents to pay the fees to the Council while it refunded them to Mrs X. It would usually consider a total refund with the Council collecting fees from the enforcement agents only where it had acted with fault. In the Council’s view, the notice correctly addressed to Company Z should not have been opened by anyone other than a representative of that company.
22. In commenting on my draft decision, the Council says it cannot process immediate refunds. However, it has a 10-day service level agreement for processing payments. It paid the bulk of the refund on 4 July 2018 having received the request on 22 June 2018. Therefore, it does not believe it caused any delay. Mrs X’s representative contacted the Council on 4 and 11 June 2018 asking for a refund.
23. The Council refused to pay Mrs X’s legal costs saying she did not need legal representation to present a complaint to the Council.
24. Mrs X says the Council took too long to refund her payment.

Analysis – was there fault leading to an injustice?

25. My role is to decide if the Council acted without fault managing the refund of the payment Mrs X made in error.
26. The Council says an agent visiting businesses will question those present to identify if they represent the company the subject of the visit and debt. There is a dispute about what happened at Unit A. The enforcement agent says they hand delivered the notice without any discussion. Mrs X says they threatened to remove goods.
27. I cannot safely decide what happened when the enforcement agent delivered the Notice. However, a visit from an enforcement agent with a Notice containing information that says if you do not pay the debt the enforcement agent may seized your goods is a significant event. The aim of the Notice is to elicit payment. Mrs X clearly became anxious about receiving this notice and in her anxiety and confusion believed this notice related to Company Q’s time at Unit A. Therefore, Mrs X arranged payment only to realise shortly afterwards, her mistake. Depriving her business of over £33,000 when she also had the correct business rates bill to pay naturally caused concern.
28. Payment is taken quickly. Mrs X paid the debt on 4 June. Mrs X’s representative contacted the Council on 4 and 11 June. On being asked to complete a refund form, Mrs X completed and returned it on 21 June 2018. The complete refund took until 25 July. That is too long. I recognise the Council paid the bulk of the refund on 4 July 2018, but its agents took longer to repay the costs. Splitting, and therefore delaying full payment may be convenient to the Council but it resulted in inconvenience to Mrs X. The Council should respond as a corporate body and make the complete payment. I understand the Council did not see any reason to pay the full refund and collect the costs from its agents but it effectively delayed full payment. That represents poor customer service because Mrs X made a mistake and naturally expected a refund would be paid in total, not split. Mrs X paid the debt in error on 4 June 2018 and had to wait until 25 July 2018 for the complete refund.
29. Not having a transcript of the telephone conversation and not being a party to it I cannot decide what the Council’s enforcement agents said when Mrs X called to pay the business rates. Just as it would check her identity if visiting the property, it should check records to show from whom it may expect payment. That would include checking whether Mrs X represented Company Q (registered as liable for the current business rates) or Company Z (liable for the debt).
30. The Council has explained that where a refund is claimed by a third party it would ask for proof of payment. However, the payment through BACS clearly records this as a payment from Company Q. Therefore, the Council knew as Mrs X was a representative of Company Q the payment came from Company Q. That should have negated the need for proof of payment. I might expect the Council to have queried why Company Q had paid Company Z’s debt and it did not. Therefore, I find the Council at fault for its handling of the refund.
31. I find the Council at fault in the delay in refunding the payment and not paying it all on the same date.
32. The Council’s investigation into the complaint did not identify that it accepted a payment on 4 June 2018 clearly identified from Company Q. This should have triggered a review.
33. The payment caused by confusion arising from the legitimate delivery of a notice to Unit A in search of Company Z represents an understandable mistake by Mrs X. I find it did not occur because of any fault by the Council in serving the notice on that address.
34. I understand Mrs X’s decision to engage solicitors. The Ombudsman does not usually expect complainants to make complaints to councils or to the Ombudsman through their solicitors. The Ombudsman and Council provide a free complaints service. I find the Council considered the argument that it pays costs without fault and provided a reasoned answer. Therefore, I do not recommend the Council pay Mrs X’s legal costs.
35. The fault by the Council impacted on Mrs X’s error in paying Company Z’s business rates. It delayed an immediate refund and that put her to inconvenience and distress.

Recommended and agreed action

36. To remedy the injustice caused I recommend, and the Council agrees to within four weeks of my final decision:
• Apologise to Mrs X for the inconvenience caused;
• Pay to Mrs X £150 in recognition of the added, avoidable distress the Council caused to Mrs X.

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Final decision

37. In completion of my investigation I find the Council at fault and that compounded the error made by Mrs X.

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Investigator's decision on behalf of the Ombudsman