Summary: Mr X complained the Council wrongly continued with bailiff action after he paid off his business rates debt. Further he says it sent notice of the debt to the business address but did not contact him directly. The bailiffs are at fault for incorrectly calculating their fees. The Council has taken action to prevent recurrence.

The complaint

1. The Council wrongly continued with bailiff action after Mr X paid off his business rates debt. Further he says the Council sent notice of the debt to the business address and did not contact him directly.
2. Mr X says this has caused his company financial difficulties and he feels harassed by the bailiffs’ actions.

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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. We investigate complaints about councils and certain other bodies. Where an individual, organisation or private company is providing services on behalf of a council, we can investigate complaints about the actions of these providers. (Local Government Act 1974, section 25(7), as amended)
5. 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

6. I have considered:
• The information provided by Mr X and discussed the complaint with him;
• The Council’s comments on the complaint and the supporting information it provided; and
• Relevant law and guidance.
7. Mr 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

Law and guidance

8. Business rates is a local tax on business premises. The Valuation Office Agency (VOA) keeps the business rating list and decides if a property should be rated. The VOA also decides the rateable value of the premises, and the date each premises should enter and leave the list. Local authorities are responsible for collecting business rates.
9. A local authority can get a liability order from the Magistrates Court for non-payment of business rates. A liability order gives a local authority legal powers to take enforcement action to collect the money owed.
10. The ‘Taking Control of Goods (Fees) Regulations 2014’ sets out the fees a bailiff can charge when recovering debt and the three stages they must follow:
• The Compliance Stage – a bailiff 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 a bailiff 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, bailiffs can charge a further 7.5% of the amount outstanding over £1500.
• The Sale or Disposal Stage – this stage starts once a bailiff has taken control of the goods. They must then allow seven clear days between the removal of goods and their sale. In this time a bailiff must value the goods and send a copy to the debtor. The fee for this stage is £110.

What happened

11. Mr X owns office space that he rents out. He pays business rates on the property. In the financial year 2021-2022 Mr X paid his monthly business rates intermittently roughly every two months. He had not agreed an alternative payment arrangement regarding this payment schedule.
12. At the beginning of March the Council issued a demand notice for the financial year 2022-2023. It requested payments to be made by the middle of each month.
13. The Council issued a final notice for the outstanding £6,016 for 2021-2022 in early March. It received the payment in mid-March. The Council did not receive a payment for April by the deadline given in its demand notice. It issued a reminder for payment in late April 2022. A payment of £3,016 was made the same day for that month. This brought the account up to date.
14. The Council did not receive a business rates payment in May. In early June it issued a final notice demanding the years business rates in full. In mid-June the Council received a payment of £6,016. This covered the payments due in May and June.
15. In early July the Council issued a summons for the outstanding £27,179.50. It received no payment for either the month or the full amount. It applied for a liability order in late July which the court granted. In mid-August the Council passed the debt to the bailiffs for recovery.
16. Mr X made further payments following the instruction of bailiffs. In early September he made a further payment of £6,016 to the Council. The Council informed the bailiffs that it had received the payment but did not withdraw instructions. The bailiffs attended Mr X’s business property in mid-September to carry out enforcement action and this incurred a charge of £2,161. The bailiffs could not access the property at this time. In late September Mr X made a payment of £3,008.
17. Mr X contacted the Council in late September to raise concerns that he had not received any recovery documents at the office premises. He explained that he was having some cash difficulties. The Council said that as Mr X had not contacted it about this previously, it had proceeded correctly and therefore the debt remained due.
18. Mr X paid his outstanding business rates in early October 2022 but he did not pay the bailiff fees. These remain outstanding. On the same day he raised a complaint about the Council’s actions in recovering the business rates. The Council responded in early November. It did not uphold the complaint and stated the debt remained due.
19. During our investigation the bailiffs, appointed by the Council, have acknowledged that they calculated their fees incorrectly. They accepted that Mr X had made a payment prior to the visit, which meant the figure used to calculate their fees should have been lower. The bailiff said the fees should be £1,710 (7.5% of £19,663 plus £235) rather than £2,161 (7.5% of £25,679.50 plus £235).
20. The bailiffs informed Mr X of this calculation error in late February 2023 and apologised for not spotting the error sooner.

Findings

21. Mr X accepts that he was not paying his business rates every month. The Council is not at fault for taking recovery action on unpaid business rates. It provided clear bills and reminders to Mr X before taking court action.
22. I appreciate Mr X’s comments that he did not receive any post so was unaware of the Council’s actions. It was appropriate for the Council to issue its reminder and final notice to the business address. Debt recovery documents intended for court action cannot be served by email. There is no fault in the Council sending this correspondence by post.
23. The Council has accepted that the bailiffs acting on its behalf made an error in calculating the debt owed. The Council was aware of the payment and communicated this to the bailiffs. The bailiffs should have recalculated the fees when they received this information. Its failure to do so is fault.
24. The bailiffs have apologised to Mr X for the delay in identifying the error. Mr X is frustrated he has been chased for the incorrect amount of fees and that this was not spotted sooner. The apology provided is a sufficient remedy to address the injustice caused to him.
25. Had Mr X paid the fees he could have been financially disadvantaged by the bailiffs’ failure to ensure their calculations were correct. It is therefore important to record payments clearly so they can be accounted for when calculating fees.
26. At draft decision I recommended the Council should remind the bailiffs of the importance of recording payments received and including this in its calculations of fees due. It has provided evidence it has already done this. The bailiffs also stated they have checked all fees locally above £310 this year to confirm they have been calculated correctly. This is satisfactory remedy to prevent recurrence.

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Final decision

27. I have completed my investigation. I have found fault, appropriate action has been taken to remedy the injustice and stop the fault from reoccurring.

Investigator’s final decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman