Summary: Mrs X complained about how the Council took recovery action for unpaid business rates, including using enforcement agents. There was fault in how the Council failed to update Mrs X about its decision in February 2020 but this did not cause an injustice to Mrs X.

The complaint

1. Mrs X complains about how the Council took recovery action for unpaid business rates owed by a company she jointly ran in 2019. She says the Council failed to update its records after she left the company, did not tell her about the debt and should not have used bailiffs to collect it.
2. She says the enforcement action the Council took made her feel threatened and affected her mental health. She wants the Council to apologise and write off the debt.

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What I have and have not investigated

3. I have investigated how the Council responded to the information Mrs X provided about the change in ownership of her business and the how the Council took enforcement action.
4. I have not investigated whether the Council correctly decided that Mrs X was still liable for the business rates. We cannot normally investigate something someone can appeal to a court about. Only the magistrates’ court has the power to decide whether someone is liable for business rates. I am satisfied it would have been reasonable for Mrs X to appeal to the magistrates’ court about whether she was liable.

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The Ombudsman’s role and powers

5. 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)
6. The Local Government Act 1974 sets out our powers but also imposes restrictions on what we can investigate.
7. 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)
8. The law says we cannot normally investigate a complaint when someone could take the matter to court. However, we may decide to investigate if we consider it would be unreasonable to expect the person to go to court. (Local Government Act 1974, section 26(6)(c), as amended)
9. The magistrates’ court deals with decisions about liability for business rates.
10. When considering complaints, if there is a conflict of evidence, we make findings based on the balance of probabilities. This means that we will weigh up the available relevant evidence and base our findings on what we think was more likely to have happened.
11. If we are satisfied with an organisation’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

12. I considered:
• the information Mrs X provided and discussed the complaint with her;
• the Council’s comments on the complaint and the supporting information it and its enforcement agents provided; and
• relevant law, guidance and Council policy.
13. Mrs X and the organisation had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

Business rates

14. The Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 cover both the way councils collect payments of business rates and the way councils can recover business rates debt. The Tribunals, Courts and Enforcement Act 2007 and associated regulations cover the way bailiffs may recover debts.
15. The business rates bill for the year is due on 1 April. A council will usually collect payment through monthly instalments. If any instalment is missed, the council will send the liable person a reminder. If a payment is still not made or a further payment missed, then the entire outstanding balance will be due (that is the full amount for the rest of the year).
16. To use the various powers available to it to recover unpaid business rates, a council must apply to the magistrates’ court for a liability order against those it believes are liable. Once a council has obtained a liability order it can take recovery action.
17. A liability order gives a council the legal power to take enforcement action to collect the money owed. This can include taking deductions from benefits, getting an attachment of earnings (this means deductions are taken directly from earnings by an employer and passed to the council) or using bailiffs. The council can decide which recovery method it wishes to use but it can only use one method for one liability order at one time.
18. Before obtaining a liability order, the Council must send a further reminder notice. If someone fails to pay the outstanding balance, the magistrates’ court will then send the person a summons to attend a hearing about whether the make a liability order.

Enforcement agents / bailiffs

19. A council may ask bailiffs to visit a person’s property and seize goods to the value of a business rates debt, if it has a liability order from the magistrates’ court.
20. Bailiffs’ 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 bailiffs may take control of goods.
21. Government guidance ‘Guidance to local councils on good practice in the collection of council tax arrears’ says councils should remain prepared to deal directly with individuals at any point. It says councils can ‘call action back from the bailiffs at any time and where there is a case to do so they should consider such action’.

Vulnerable debtors

22. A bailiff may not take control of goods if the debtor is a vulnerable person and they are the only person present.
23. The Taking Control of Goods (Fees) Regulations 2014 say bailiffs may recover fees from the debtor. Where the debtor is a vulnerable person, the fee due for the enforcement stage is not recoverable unless the bailiff has given the debtor an adequate opportunity to get assistance and advice in relation to the exercise of the enforcement power.
24. The law does not define what a vulnerable person is. ‘Taking Control of Goods: National Standards’ (“the Standards”) sets out the responsibilities of creditors and bailiffs. The Standards say -
• Creditors should remember that bailiffs act on their behalf and they are accountable for the bailiff’s actions. They must consider if the debtor is vulnerable and if so, agree clear protocols governing the approach the bailiff should take. Examples of a vulnerable debtor include someone who is seriously ill or disabled.
• Bailiffs must not:
1. Falsely imply action will be taken when it cannot legally be taken
2. Falsely imply a course of action will ensue before it is possible to know whether such action would be permissible
3. Falsely imply action has been taken when it has not
4. Falsely imply a debtor refusing entry to a property is an offence
25. If a bailiff identifies a vulnerable debtor, they should alert the creditor and ensure they act in accordance with all relevant legislation. Bailiffs should be aware that vulnerability may not be immediately obvious.
26. The Council’s debt recovery policy says:
• a debtor being vulnerable does not prevent the Council taking any recovery action (including the use of bailiffs); and
• it will ensure any vulnerability of a debtor is fully considered before it takes any action.

What happened

27. Mrs X ran a business with a relative until mid-2019 when Mrs X said she left the business, which continued to be run by her relative alone.
28. Due to business rates arrears the Council applied for a liability order in January 2020. The Council sent correspondence about this, including the required reminder notice, to the business premises, addressed to Mrs X and her relative. The magistrates’ court issued the liability order in early February 2020.
29. Mrs X said told the Council she was no longer running the business with her relative at the time she left. However, the earliest evidence of Mrs X having told the Council was in mid-February 2020 when Mrs X emailed the Council and sent it a copy of a letter from her accountant stating that Mrs X had left the business.
30. The Council wrote to Mrs X’s relative in early March 2020 asking for proof that they were now a sole trader. The Council said that it received no reply from Mrs X’s relative and I have seen no evidence that Mrs X’s relative sent the Council the information it asked for.
31. The Council also contacted the owner of the premises Mrs X and her relative used. The owner told the Council that Mrs X and her relative had ceased operating the business from 10 March 2020.
32. However, there is no evidence of further contact between Mrs X and the Council between February and early-August 2020, when the Council identified Mrs X’s current address and sent her a copy of the business rates bill.
33. Mrs X contacted the Council about the bill and again queried why the Council was asking her to pay as she had left the business. The Council told Mrs X that:
• the letter from her accountant was not enough to prove her relative was a sole trader;
• it had asked her relative for proof but had never received a response; and
• the property owner had told it Mrs X was still part of the business until March 2020.
34. The Council advised Mrs X to contact its recovery team to make an arrangement to pay the outstanding debt.
35. However, there is no evidence Mrs X had any further contact with the Council until it sent her a final reminder letter in June 2021 telling her that if she did not pay the balance, it would pass the debt to bailiffs.
36. Mrs X replied to the Council, again saying that she had told the Council she had left the business in August 2019. The Council repeated what it had told Mrs X in August 2020 and confirmed the information it needed to prove that Mrs X was not liable for the debt. In the meantime, the Council advised Mrs X to agree a payment plan to prevent any further action. There is no evidence Mrs X contacted the Council in response to this email.
37. The Council sent Mrs X a further final reminder letter in August 2021, before passing the account to bailiffs in September 2021.
38. The bailiffs wrote to Mrs X in later November 2021 asking her to make a payment arrangement. Mrs X wrote back to the bailiffs around a week later and told them she was vulnerable because of a mental health condition. The bailiffs asked Mrs X for evidence of her health condition and explained that just because she had a mental health condition did not mean collection activity would stop.
39. Mrs X sent supporting information to the bailiffs in early January 2022 and the bailiffs transferred Mrs X case to its welfare team. The bailiffs encouraged Mrs X to contact them to arrange affordable repayments.
40. In late January Mrs X sent the bailiffs information about her income and expenses which said that her expenses exceeded her income. The bailiffs asked said they could not agree repayments based on the information Mrs X had provided. Mrs Y disputes this and says she made an offer of regular payments.
41. In the absence of an offer of payment, a bailiff visited Mrs X’s property in mid-March 2022. There was nobody at home at the time, so the bailiff left a letter.
42. Mrs X’s husband called the bailiff the following day about the visit and told them Mrs X was disputing liability for the debt. Mrs X also complained to the bailiffs and the Council that they both ignored her vulnerability and the bailiff was rude to her husband on the telephone.
43. The Council instructed the bailiffs to accept repayments of £50 a month in April 2022, which Mrs X paid between May and August 2022. After Mrs X complained to the Ombudsman the Council agreed to reduce the payments to £40 a month, which Mrs X paid since September 2022.

My findings

44. Mrs X complained to the Ombudsman in July 2022, so her complaint about events before July 2021 is late. We can investigate late complaints if we decide there are good reasons to do so. Mrs X said she sought advice from a national debt advice provider about how to deal with the debt throughout 2021. Although the advice provider was not acting for Mrs X, I am satisfied Mrs X was following its advice during that time and complained to the Council and Ombudsman when she was advised to. I am satisfied this is a good reason why Mrs X did not complain sooner and therefore I have decided to consider events from August 2019.

Dispute about liability

45. I cannot decide whether the Council was correct to say that Mrs X was liable for the debt. That was the role of the magistrates’ court. The evidence shows the Council sent the required reminder notice to Mrs X’s business premises in October 2019, as it was required to do. There was no fault in how the Council sent the required notices. Mrs X’s relative was still operating the business at the time and could have told Mrs X about her hearing.
46. I am satisfied that, on the balance of probabilities, the evidence shows Mrs X first told the Council about having left her former business in February 2020. This was when Mrs X sent the Council the letter from her accountants.
47. By the time Mrs X contacted the Council, it had already obtained a liability order saying that Mrs X was liable. Mrs X contacted the Council shortly after the magistrates’ court issued the liability order in early 2020. I am satisfied, on the balance of probabilities, that Mrs X knew about the liability order at the time. I am also satisfied she could have applied to the magistrates’ court to set aside the liability order is she disagreed with it.
48. While the Council sought further evidence from Mrs X’s relative, there is no evidence the Council had further contact with Mrs X between February and August 2020. The Council did not tell Mrs X it had not accepted the letter from her accountant as proof she was no longer part of the business. I am satisfied that failure to tell Mrs X the outcome of her query was fault. Even though the Council did not have a mailing address for Mrs X, it had her email address. There is no evidence the Council used this to update Mrs X.
49. However, I do not think that caused Mrs X an injustice because, even if the Council had updated Mrs X at the time, I think it is unlikely this would have changed the outcome. The Council took no other action to enforce the debt during that time and Mrs X had further opportunities to provide evidence from August 2020.
50. I am satisfied there was no fault with how the Council dealt with Mrs X’s query about the debt in August 2020. The evidence shows the Council sent Mrs X a copy of the bill in August 2020, explained what information it needed to review whether Mrs X was liable and encouraged her to make an arrangement to pay. However, there is no evidence Mrs X contacted the Council again until mid-2021.
51. The Council then gave Mrs X another opportunity for her or her relative to provide the evidence it needed. I am satisfied that the information the Council asked for was appropriate given the conflicting information it received in March 2020. However, neither Mrs X nor her relative have been able to provide the information the Council asked for.

Enforcement action

52. The Council’s bailiffs responded promptly to Mrs X’s contacts and, after asking Mrs X for supporting evidence, accepted that she was vulnerable shortly after she made them aware of this.
53. The Council and its bailiffs made several attempts to agree repayments with Mrs X before arranging for a bailiff to visit Mrs X’s home. Although the bailiffs accepted Mrs X was vulnerable due to her mental health condition, this does not mean they could not visit Mrs X’s home. They, instead, needed to take Mrs X’s health condition into account in its dealings with her.
54. I accept Mrs X found the enforcement process and the prospect of a visit from a bailiff distressing. However, I am satisfied the Council and the bailiffs did take into account Mrs X’s vulnerability and only visited after trying to agree repayments first.
55. Mrs X was not at home the one time the bailiff visited her home. Therefore, I cannot say how the bailiff would have interacted with Mrs X considering the vulnerability. Although Mrs X said her husband found the bailiff to be rude on the telephone the following day, I cannot say what the conversation was like as I was not there to hear it.
56. I am satisfied there was no fault in how the Council decided to use enforcement agents to collect the debt, or in the actions of the bailiffs acting on behalf of the Council. There is no evidence of conduct by the council’s bailiffs that goes against the Council’s policy or national guidelines.

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Final decision

57. I have completed my investigation. Although there was some fault in how the Council did not update Mrs X about its decision in February 2020, this did not cause an injustice to Mrs X.

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Investigator's decision on behalf of the Ombudsman