The Ombudsman's final decision:
Summary: Mr X complains the Council unreasonably charged him for court costs and enforcement agent fees for collecting business rates when it sent all relevant information to the wrong address. We found fault as the Council’s enforcement agents did not serve Mr X with a new Notice of Enforcement to his current address. This caused Mr X an injustice as he has paid avoidable enforcement fees. We have recommended a suitable remedy and so are minded to complete our investigation.
- I have called the complainant Mr X. He complains the Council unreasonably charged him for court costs and enforcement agent fees for collecting his business rates when it sent all relevant information to the wrong address. Mr X considers the Council could have done more to check his current address before taking recovery action, which would have avoided him incurring the extra charges.
- Mr X also complains the Council encouraged him to apply for Small Business Rate Relief (SBRR) which it granted and then withdrew. Mr X complains the Council’s enforcement agent failed to send him a valid Notice of Enforcement before visiting his current address. Mr X says the Council’s actions have caused him distress and time and trouble in trying to resolve the matter.
The Ombudsman’s role and powers
- 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)
- 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)
How I considered this complaint
- I have read the information submitted by Mr X and spoken to him about the complaint. I considered the Council’s comments on the complaint and the supporting documents it provided.
- Mr X and the Council now have an opportunity to comment on my draft decision. I will consider their comments before making a final decision.
What I found
Enforcement agents and enforcement fees
- The Council may ask enforcement agents (agents) to attend a person’s property and seize goods to the value of a debt, if it has a liability order from the Magistrates Court.
- Agents’ powers to seize goods are set out in the Tribunals, Courts and Enforcement Act 2007 (“the Act”). Schedule 12 of the Act provides a clear procedure for how agents may take control of goods.
- The Taking Control of Goods Regulations 2013 (“the Regulations”) set out ways in which an agent can secure goods on the premises.
- Section 8 of the Regulation says (1) Notice of Enforcement must be given—
- (a) by post addressed to the debtor at the place, or one of the places, where the debtor usually lives or carries on a trade or business;
- (b) by fax or other means of electronic communication;
- (c) by delivery by hand through the letter box of the place, or one of the places, where the debtor usually lives or carries on a trade or business;”
- The Compliance Stage – an agent must issue a notice of enforcement seven clear days before they take control of the goods. The fee for this stage is £75.
- The Enforcement Stage – this stage starts once an agent has made a first visit. At this visit they can take control of the goods. Once they have done this, they must give the debtor a notice. The fee for this stage is £235. If outstanding debts are more than £1500, agents can charge a further 7.5% of the amount outstanding over £1500.
- The Sale or Disposal Stage – this stage starts once an agent has taken control of the goods. They must then allow seven clear days between the removal of goods and their sale. In this time an agent must value the goods and send a copy to the debtor. The fee for this stage is £110.
Interpretation Act 1978
- The laws under which summonses, and other documents are served say documents may be served on a person by delivering it to them in person or sending it by post to their proper address. Proper address is taken to be the last known address.
- Unless the contrary is proved, a document is deemed to be served by post when it would be delivered in the ordinary course of post under Section 7 of the Interpretation Act 1978 which states;
“…where an act authorises any document to be served by post, unless the contrary intention appears, the service is deemed to be effective by properly addressing, prepaying and posting a letter containing the document; and, unless the contrary is proved, is deemed to have been effected when the letter would have been delivered in the ordinary course of post.”
What happened in this case
- This section sets out the key events in this case and is not intended to be a detailed chronology.
- Mr X owns a business property in the Council’s area which he leased out to a company. In March 2020 the company told the Council it had left the property owned by Mr X as the lease ended. The company gave the Council a copy of the lease confirming Mr X owned the building and his last known address .
- The Council issued two Non-Domestic Rate bills (also known as business rates) from March 2020 to Mr X for different time periods to his last known address.. The Council sent reminder notices to Mr X and gained summonses for Mr X to attend magistrate’s court hearings for the outstanding amounts as Mr X did not respond to the communications. The Courts granted Liability Orders to the Council to collect the unpaid business rates from Mr X.
- The Council passed the orders to its agents to collect on its behalf. The agents sent a Notice of Enforcement to Mr X in January 2021 for the two outstanding amounts including the agents’ fees of £75 for each notice. The Notice must give the debtor a minimum of seven days’ notice of enforcement action. The agents sent the notices to Mr X’s last known address and to his business property.
- The agents visited Mr X’s last known address twice in March 2021, which added an enforcement fee of £510.96 to the outstanding balance due to the amount Mr X owed. Mr X was unknown at the address, so the agent carried out online checks and found Mr X’s current address. The agents visited Mr X’s current address in April 2021. Mr X paid the outstanding debt to close the case with the agents.
- Mr X emailed the Council about the agents’ visit. Mr X said he was unaware he owed any money as his business property’s rateable value was below the £12,000 threshold when a council charges rates. Mr X said he paid the outstanding balance but found the matter distressing. The Council registered Mr X’s complaint.
- Mr X applied for SBRR. The Council contacted Mr X to clarify the liability start date in March 2020 or whether the property was unoccupied at that date. Mr X responded he wished to claim from the liability date. The Council accepted the claim and applied SBRR effective from March 2020. The Council withdrew all recovery action and associated costs from the account and issued new bills.
- In April 2021 the Council received a bill addressed to Mr X at his old address marked ‘not known at this address’. The Council visited Mr X’s business property in May 2021 and found it unoccupied. Because of this Mr X would not qualify for SBRR. The Council issued new bills to Mr X.
- The Council responded to Mr X’s complaint about paying business rates on a property he considered fell below the rateable threshold and that it should apply SBRR to the account. The Council advised Mr X it received his application for SBRR but could only apply it to occupied premises. The Council’s inspection found the building unoccupied since November 20218. The Council removed the SBRR from the account and told him the payment he made to the agents was correct. The Council told Mr X to disregard the revised bills it issued, and it would send new ones for the current period of liability.
- Mr X remained unhappy with the Council’s response. Mr X said he was only aware he owed money when the agents visited his home and the Business Rates section told him to apply for SBRR. The Council wrote to Mr X again. It sent him copies of the bills, reminders and summonses issued and a breakdown of the payment made to the agents. The Council said it was good practice for officers to advise residents and business owners if there was a possibility of reducing their council tax or business rates. But the application process should be clear on who would be able to claim for such discounts. The Council apologised if it was not clear during the application process.
- Mr X complained again he was unaware of the outstanding balance and the Council had sent documents to an address he had not lived at for many years. Mr X considered the Council could have checked his address and if so, he would have avoided the enforcement costs of £843.96. Mr X also complained the agents should have served a Notice of Enforcement on him before visiting his current home in April 2021. Mr X said if so he could have avoided some fees.
- The Council received some more bills addressed to Mr X from his old property marked ‘addressee gone away’ in June 2021. The Council provided Mr X with copies of the agents’ Notices of Enforcement sent to his old address and business property.
- The Council responded to Mr X’s further complaint. It explained the law allowed the Council to issue bills and reminders to people at their last known address. The Council said it did not receive any returned bills from Mr X’s old address until April 2021. The Council then removed the address for billing. The Council explained if it received returned letters in 2020 it would have made further attempts to find out Mr X’s current address. But it was the rate payer’s responsibility to tell the Council of any change of address. The Council was satisfied it had correctly billed Mr X as he had not given the Council his current address.
- The Council explained agents need to serve the Notice of Enforcement to the relevant address. In this case it was Mr X’s last known address, and the address would have been current when the courts granted the liability orders. The Council said the court must be satisfied reminders and summonses have been issued correctly. And this would be if left at or delivered to a person’s usual or last known address before issuing a summons. The Council believed the court was satisfied as it agreed to the liability orders. So, the Council considered the notice of enforcement was lawfully issued to Mr X at the last known address. And there was no statutory requirement for the agent to issue a further notice to any other presumed addresses in the future. The Council said because of this it could not ask the agents to revise the fees.
- The Council noted officers had advised Mr X to apply for SBRR retrospectively . The Council accepted the application but later rescinded it. It said it cannot apply SBRR to empty properties, so it was entitled to remove the relief when it found the business property. The Council considered it had previously responded to Mr X’s concerns about applying for SBRR. The Council apologised for the delay in sending the revised bills and it was reissuing them to him.
- Mr X told the Council in November 2021 he had sold the business property. The Council closed Mr X’s account for the building and sent a closing bill.
- Mr X complains the Council should have done more to check his current address before taking enforcement action. The law requires the Council to send documents to a person’s last known address. The Council used Mr X’s address from the lease with his tenants. The documents posted to that address were not returned by the occupants until April 2021, so the Council was unaware Mr X did not live at that address before it started enforcement action. It was Mr X’s responsibility as a ratepayer and person with an interest in the business property to keep the Council advised of his current address. So, I do not consider there has been fault by the Council as it sent the documents to Mr X’s last known address.
- Mr X says the agents should have served a new Notice of Enforcement on him once they became aware of his current address. If so, it would have avoided some of the enforcement costs he paid. Schedule 12 of The Taking Control of Regulations says the Notice of Enforcement must be given by hand delivery or post. These must be ‘addressed to the debtor at the place, or one of the places, where the debtor usually lives or carried on a trade or business’. However, there is no definition in the regulations of ‘places where the debtor usually lives or carries on a trade or business’ and nothing about what happens if the debtor does not live/work there. The Interpretation Act 1978 says unless the contrary is proved, a document is deemed to be served by post when it would be delivered in the ordinary course of post. So, I am satisfied at the time the document was served it was served legally – at the last known address.
- But good practice suggests that having become aware an address was not good for service, and found a new address, the agents should have resent the Notice of Enforcement to the new address. The agents’ records show on the two visits to Mr X’s old address they were told there was no one of that name there and never had been. So, I consider this strongly suggests Mr X was not living or carrying on a trade from the old address. Because of this the contrary was proved, as specified in the Interpretation Act, and so the service of the Enforcement Notice was not effective. The agents did not act on this which is fault as the property the agents visited was not Mr X’s home. So, the agents should have removed the enforcement fees from Mr X’s account. Once the agents then found Mr X’s current address, they should have sent a new Notice of Enforcement.
- I consider it likely, based on Mr X’s previous response and actions, he would have paid the outstanding business rates on his business property without needing a visit from the agents. This means the agents would not have charged the £510.96 enforcement fee for visiting Mr X’s property. The agents’ failure to send a new Notice of Enforcement has led to an injustice to Mr X in the form of the enforcement visit fees. Mr X remains liable for £75 Compliance fee as that is charged when the whole enforcement process starts.
- To remedy the injustice caused to Mr X by the actions of the Council’s agents I recommend the Council apologises to Mr X he was not sent a new Notice of Enforcement to his current address. I also recommend the Council refunds Mr X the enforcement visit fees of £510.96.
- Mr X remains unhappy officers advised him to apply for SBRR and then this was subsequently rescinded. The evidence shows that the officers acted in good faith when they advised Mr X to apply for SBRR. It is unfortunate that the Council later found the property was unoccupied, so Mr X did not qualify for the relief. The Council has apologised to Mr X if the information given during the application process was not clear. I consider the apology is suitable action for the Council to take. This is because the officers did ask Mr X when he was applying whether the property was unoccupied, but Mr X did not respond on that point. If he had done so, then it is likely this issue would have been identified sooner in the process.
- To remedy the injustice caused to Mr X by the actions of the Council’s enforcement agents I recommend the Council apologises to Mr X he was not sent a new Notice of Enforcement. I also recommend the Council refunds Mr X its agents’ enforcement visit fees of £510.96.
- The Council should take this action within one month of the date of my final decision.
- Subject to further comments by Mr X and the Council, I intend to complete my investigation. There was fault by the Council as its enforcement agents did not serve Mr X with a new Notice of Enforcement to his current address. This has caused Mr X an injustice as he has paid avoidable enforcement fees.
Investigator's decision on behalf of the Ombudsman