Summary: Mr B complains about how the Council has communicated with the Valuation Office Agency about whether his properties should be liable for business rates, rather than council tax. And about the enforcement action the Council has taken. The Ombudsman’s view is the Valuation Office Agency decides liability. And it is not within the Ombudsman’s jurisdiction. We do find some fault with the enforcement action and have agreed remedies with the Council. But the faults did not lead to Mr B’s claimed injustice.

The complaint

1. The complainant, who I refer to here as Mr B, complains about issues relating to council tax and business rate liability for flats he owns:

• The Council sent many bills and took enforcement activity, without considering his representations.
• The Council did not tell him about the Valuation Office Agency (VOA) appeal process, until it was too late to challenge the 2010 Non-Domestic Rates (NDR - ‘business rates’) list.
• The VOA has told him the Council did not contact it between August 2014 and January 2019.
• The Council told him its enforcement action was on hold pending VOA decisions. Yet he kept receiving enforcement correspondence.
• It was the Council’s fault that the VOA advised the Council to delete the wrong accounts.

2. As a remedy Mr B seeks:

• A full refund of overpayments since December 2011, which he estimates is likely to be over £40,000.
• Compensation for his time, payable at his business rates.
• Compensation for intentional distress caused through malicious communication.
• The Ombudsman to recommend that senior officers are criminally prosecuted for malicious communication and obtaining a pecuniary advantage by deception.
• The Ombudsman to recommend ‘…a Parliamentary enquiry into how Bulk Liability Orders can possibly be lawful when there is absolutely no Judicial Process involved, no Court record kept and no appeal procedure other than Judicial Review.’

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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’.
4. 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)
5. 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

6. The information I have seen includes:
• the documents Mr B supplied with his complaint;
• the Council’s three detailed responses to 2019 complaints from Mr B.
• updates from Mr B, including his replies to the Council’s complaint responses;
• Mr B’s comments on this and an earlier draft decision.

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What I found

Legal and administrative background

Banding and listing of properties

7. The VOA decides the status of a property and its liability for either council tax or business rates. The VOA is a government agency and is not within our jurisdiction.
8. There is a right of appeal to the Valuation Tribunal Service (VTS) against a decision by the VOA, about liability for council tax and business rates.
9. Councils collect council tax and business rates on behalf of the government. Taxpayers are required to pay the amount billed by a council pending any decision by the VOA, or appeal decision from the VTS.

Council tax

10. Council Tax is a tax made on domestic properties. Councils issue one bill each tax-year, to each household. The law says that council tax can serve a document (about billing or enforcement) on a person by delivering it to them, leaving it at their proper address, or sending it by post to their proper address. Proper address is taken to be the last known address.
11. For unpaid council tax, recovery is by action in the magistrates’ court. The Council may seek a liability order for each year a debt is not paid. The magistrates’ court must grant a liability order if it is satisfied the sum has become payable and has not been paid. It has no powers to ‘look behind’ the billed amount. A magistrates’ court can quash a liability order, if the order should not have been made. A local authority must make the request. (Paragraph 12A Schedule 4 to the Local Government Finance Act 1992 as inserted by Section 82 of the Local Government Act 2003)
12. Matters from the service of the magistrates’ court summons, to the end of the hearing are out of our jurisdiction. This includes the award of, or the level of, court costs. (Schedule 5.1 of the 1974 Local Government Act)

What happened

Background events

13. Mr B owns a property he has converted, from commercial use, to serviced apartments for let. He has converted different floors at different times. Mr B also owns another business.
14. In April 2014 the Council told the VOA about new flats through a Billing Authority Report (BAR). These were conversions to two flats of the first floor of Mr B’s premises. The VOA brought the flats into its rating list for council tax, with December 2013 as a start date. Mr B says the Council sent the VOA incorrect information, so it mistakenly understood the flats were new, not conversions.
15. The Council later asked the VOA to delete the council tax listings, as the flats were serviced apartments. The VOA has accepted it had duplicate entries (council tax and NDR) for the flats between December 2013 and March 2015.
16. In September 2015 Mr B transferred ownership of the property from his personal ownership to a company, of which he is the sole owner (company C). He appointed a manager (Ms D) for the apartments.
17. Mr B says, for some years, he was unaware of any problems with the billing for the property, as administration assistant employees paid bills on his behalf, without questioning what they were for. But in March 2016, Mr B gave a rates demand for the property to Ms D. She challenged the bill by telephoning the Council and the VOA. She advised the property was not offices, but serviced apartments.
18. In June 2016 the VOA inspected the property. In July it advised the Council it should list the properties as domestic (ie continue to bill them for council tax). In August the Council says it asked the VOA to review its decision.
19. There was an issue during this time about the start date of company C’s liability. The Council later corrected this and refunded costs to Mr B.
20. The Council says in February 2017 it asked the VOA again to review the flats’ ratings. But the VOA told it in March to delete the NDR accounts.
21. The Council did not receive payment for the council tax bills for the two first-floor flats. So it took enforcement action on the accounts. When these accounts were transferred to the Council’s enforcement agents, Mr B paid the arrears. He says he did this to protect his business reputation.
22. Mr B first contacted the Ombudsman about the issue in August. We advised him that he needed to first complain to the Council. Mr B complained to the Council. In September it transferred credits from NDR to council tax accounts for the flats. The Council says a credit remained on Mr B’s old accounts, as it could not assume Mr B wanted these transferred to accounts for company C.
23. Mr B says the VOA failed to keep an appointment to visit his property in November 2017.
24. In November 2017 the Council upheld Mr B’s complaint. It found it should have earlier transferred credits between company C’s accounts. It withdrew costs it had made against the accounts. The response advised Mr B it could refund to him credits it still held on his old accounts. It also advised him he could ask for a review of the complaint response. Mr B responded to this email asking for some more information. The Council responded by encrypted email. Mr B asked it to send an unencrypted version. Mr B says the Council did not respond. And, as Mr B had not responded to the offer to transfer the credits, they remained on the old accounts.

The Council’s enforcement action for the company C council tax accounts

25. Mr B has provided a detailed chronology which references billing and enforcement action the Council took on three separate council tax accounts during 2018. I have used this and the Council’s responses to Mr B’s complaints, to detail what follows.

Account 1

26. The Council had been through the council tax billing and enforcement process against company C for unpaid council tax on one of the first-floor flats.
27. In September 2017 the Council transferred a credit from the NDR account for this flat to the council tax account (see paragraph 22). But the Council does not seem to have recalled the accounts from its enforcement agents.
28. In August 2018 Mr B contacted the Council after his accountant passed him an enforcement notice for the account. He advised he had not received a summons. The Council responded to advise it had placed a 56 day hold on the account, so that Mr B could contact the VOA.
29. At the end of the hold period, the enforcement agents contacted Mr B. He contacted the Council. It recalled the account from the enforcement agents.

Account 2

30. In June 2018. Mr B emailed the Council because he had received a bill and summons for council tax arrears for the other first-floor flat. An officer responded to advise he had withdrawn the summons and placed the account on hold for 90 days.
31. At the end of the 90-day period (19 September) council tax sent Mr B a reminder notice for the amount owed. I am unsure what happened after this. But on 26 November, an officer advised Mr B he had placed a hold on the account until 21 December 2018.
32. On 2 January 2019 the Council served Mr B with a summons for the amount he owned on this account, with a hearing date of 30 January.
33. In May 2019, as part of a complaint response, the Council advised that its officer had intended to withdraw the June 2018 summons. But s/he did not do so. So a magistrate granted a liability order on 11 July 2018. The Council advised a magistrate had now quashed that order. It had also quashed the 30 January 2019 liability order.

Account 3

34. In early 2018 the Council asked the VOA to provide a reference for a ground floor flat, which by then Mr B was converting from offices. It seems the VOA backdated the listing to September 2015. Mr B says this was because of confusion about which of the flats the Council had contacted the VOA about. In April the Council sent Mr B a demand for over £6000 in unpaid council tax.
35. In June the Council advised Mr B to contact the VOA if he wanted to dispute this listing. It advised him he needed to keep making payments for this flat. The Council acknowledges it should also then have sent the VOA a BAR for this property.
36. In July the Council sent Mr B a summons for the council tax debt. The Council’s officer at first suggested Mr B make a payment arrangement for the debt. Mr B advised he intended to attend the hearing. In early August, the officer withdrew the summons.
37. The ground-floor conversion was completed at the end of September. In November Mr B advised council tax it was signed off. The Council tax sent him a reminder for a bill of over £4000.
38. At the beginning of January 2019 council tax served Mr B a summons for over £6000 in unpaid council tax with a hearing date of 30 January.

The 30 January liability order hearings

39. Mr B was in contact with the Council about the summons. On 29 January 2019 the Council advised Mr B that it still held a credit of £4000. So it would request an adjournment of the hearings, to investigate. Mr B responded to say he had instructed his solicitor to attend and not to agree to an adjournment. Mr B’s view was they had enough information for a magistrate to dismiss the liability orders. However, the magistrate did not have the power to question the lists issued by the VOA (see paragraph 11). So s/he granted the liability orders.

Mr B’s complaint to the Ombudsman

40. At the end of November 2018 Mr B contacted the Ombudsman to complain he was awaiting a VOA re-evaluation, but the Council was still sending demands for council tax, including from enforcement agents. He asked the Ombudsman to investigate. We contacted the Council asking for an update. Its team responsible for complaints advised it had not reviewed his case, due to the ongoing liability dispute.
41. In December 2018 the Council’s inspector visited the premises. And in January 2019 it asked the VOA to change the listing of the properties to NDR. The Council says that in February 2019 the VOA advised it that it would not action the BAR, as it was looking in the matter under a separate report.
42. We accepted a complaint from Mr B. Later the Council provided three responses to Mr B’s complaints. I summarise the key issues from those responses:
• The Council noted some confusion with the ground floor flat; due it seemed to a delay, from May 2018, in Mr B getting permission to let the premises. It advised it would send the VOA a new BAR to support information it had already supplied, so it could review this issue.
• It accepted it should have sent a BAR earlier about the conversion of the ground floor of the property.
• Its bills had information on their back about VOA appeals. That information was also on its website.
• It accepted an error with billing company C for a period when Mr B was still liable.
• It noted it had placed temporary holds on enforcement actions on some of Mr B’s accounts, despite not being required to do so. It had done this to allow Mr B to contact the VOA. But enforcement action had continued after the end of the temporary holds.
• The responses noted further holds on the accounts to allow Mr B to liaise with the VOA. It would review those holds at their end dates.
• The VOA had by May 2019 deleted all the council tax accounts.
• The Council had asked the magistrates’ court to quash the liability orders for the council tax accounts.
• It would arrange a refund of fees Mr B had paid to enforcement agents.
43. Mr B has sent me a response from the VOA to a complaint he made to it. This says:
• It assumes BARs contain verified information. So the VOA did not usually challenge that information.
• Its default position was a property was domestic, unless a taxpayer could provide evidence to support a NDR assessment. It says it needed to see evidence the property was advertised and available for letting for more than 140 days a year.
• It dealt with Mr B’s complaint that he had not received Notices of Alteration from it.
• It set out for him the current position.

Analysis

44. Mr B wants us to investigate matters back to 2011. But my view is there are no grounds to do so. By Mr B’s own testimony, the reasons he did not become aware of the issues until March 2016, was because administrator employees were dealing with the accounts. My view is it was his responsibility to ensure somebody with the skills/experience/seniority was checking the bills for any issues.
45. In response to my draft decision, Mr B said my view was unreasonable, as it would have taken a tax expert to work out that the bills were wrong. I am not persuaded by this argument. By Mr B’s own evidence, the problem was the VOA had two entries for two of his premises. So the Council was billing him for both NDR and council tax on those properties. My view is it would not take a tax expert to recognise this issue. So I am not convinced that Mr B’s delay in noticing a problem with the accounts is a reason to accept a late complaint.
46. And, anyway, Mr B did not first contact the Ombudsman until August 2017. We asked him to first complain to the Council. He did and it responded in November 2017. The complaint letter advised him he could ask for a review of that response. Mr B responded asking for more information. He says the Council did not respond. But Mr B does not seem to have taken chased this. Instead, his next action about the complaint response was when he came back to the Ombudsman in November 2018, over a year later. So I have used November 2018 as the start date of Mr B’s complaint. I have considered events in the 12 months before that.

The Council’s contact with the VOA and whether it was the Council’s fault that the VOA advised it to delete the wrong accounts

47. The Council has set out, in its complaint responses, the history of its BARs to the VOA. These show multiple requests asking the VOA to rate Mr B’s properties for NDR. And the VOA had visited the property itself, at the latest, by June 2016. So I cannot agree the Council did not try to get the VOA to change how it assessed Mr B’s property. Or that the Council was at fault for the VOA asking it to delete the NDR accounts.
48. The exception to this is with the ground floor flat (account 3), where the Council accepts it could have earlier sent the VOA a BAR.
49. The VOA’s own response to Mr B’s complaint, provides a possible reason why it kept asking the Council to treat the properties as domestic. But my view is that is a matter Mr B should take up with the VOA.

The Council did not tell Mr B about the VOA appeal process

50. I am surprised that Mr B was not himself aware of this, as he was in a long-standing dispute with the VOA (and the Council). My view is the Council’s documentation provide satisfactory signposting to the VOA’s process.

The Council sent many bills and took enforcement activity, without considering Mr B’s representations. And it told him its enforcement was on hold pending VOA decisions. Yet he kept receiving enforcement correspondence

51. The situation was undoubtedly confusing for Mr B. As well as the three accounts I have summarised, Mr B was also dealing with residual matters relating to old accounts, including from before he transferred ownership. He was also in contact with the VOA.
52. But my review of company C’s three council tax accounts show that the Council granted temporary holds on action to allow Mr B to liaise with the VOA. I see no evidence of it, or its agents, taking action for an account while a hold was in place.
53. The problem was different accounts were on hold for different periods. And when the holds expired, recovery/enforcement activity resumed, sometimes without any warning.
54. The situation was complex and disputed. So my view is, at the end of each temporary hold, the Council should have reviewed the situation. There are examples on account 1 (once) and account 2 (twice) where recovery action automatically continued.
55. I accept the Council’s view that Mr B continued to have a duty to pay his debts, despite the dispute with the VOA. And it is not the Ombudsman’s role to determine whether the Council should have resumed recovery action at any time. If an officer had reviewed the holds, the Council might have still decided to resume recovery action. But given the history of the issue, my view is the Council should have, at the least contacted, Mr B to advise of the end of a hold before resuming action. By not doing this, the Council created some frustration, confusion and time and trouble that could have been avoided. The fact the Council has later removed costs from enforcement action gives some weight to that view (although it also mitigates the injustice to Mr B). As does the fact the Council has advised Mr B it would review the accounts at the end of hold periods, it had placed after his 2019 complaints.
56. But against that I note that, at the end of January 2019, the Council did offer to adjourn a hearing. Mr B, perhaps ill-advisedly, refused. But, anyway, the Council has now quashed those liability orders.
57. Mr B complains about enforcement action starting when he had not received a summons (see paragraph 28). But that enforcement action was for a debt the Council already had a liability order for. The Council does not have to re-serve a summons, or get a fresh liability order, when it starts to enforce historic debts.
58. The one summons where there was fault was where an officer intended to withdraw a summons but did not (see paragraph 33). That was fault. This led to the court granting a liability order, although it later quashed this.
59. The Council has accepted a delay in sending the VOA a BAR for the ground-floor conversion. That was fault.

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Recommended action

60. The Ombudsman cannot meet the following of Mr B’s demands:
• A recommendation of a criminal prosecution or a finding of intentional distress by “malicious communication”. Those matters are beyond the scope of the Ombudsman’s powers.
• A review of the liability order system for council tax debts. This system is set out in statute and is not something this Council, or any other, has any discretion about. Mr B should raise his concerns with his elected representatives. What happens in a magistrates’ court hearing is explicitly outside the Ombudsman’s jurisdiction.
• Compensation for Mr B at his business rates. The Ombudsman can make a recommendation for distress such as frustration. And for avoidable time and trouble. But our guidance describes such payments as symbolic. They must also be linked directly to identified faults. Mr B would need to seek a remedy through the courts for the compensation he claims.
61. The faults I have found are:
• some missed opportunities to review accounts at the end of temporary holds;
• a summons the Council did not withdraw;
• not sending the VOA one BAR.

I cannot link Mr B’s claimed overpayments of over £40,000 with those faults.

62. Instead I recommended the Council apologise to Mr B for the faults I have identified. I also recommend it make him a symbolic payment of £100 for the avoidable time and trouble and £100 for the avoidable frustration caused by faults I have identified. The Council has agreed to my recommendations.

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Final decision

63. I uphold the complaint as I have found fault causing an injustice. The Council has agreed to my recommendations, so I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman