The Ombudsman's final decision
Summary: Ms X complained the Council took enforcement action prematurely and passed a debt to an enforcement agent. Ms X says she incurred debt collection charges and experienced distress because of the Council’s action. We found fault with the Council for passing the debt over to enforcement agents. The Council agreed to our recommendations to recall the debt from its enforcement agents, remove any enforcement agent fees and pay Ms X £100 for the inconvenience, distress and frustration caused.
The complaint
Ms X complained the Council took enforcement action for overdue historic Council Tax charges prematurely. Ms X says the Council failed to provide a breakdown of the Council Tax charges before taking enforcement action and took action within the 14-day notice period.
Ms X says the Council passing the debt to an enforcement agent too early caused her stress because of the tactics employed by the enforcement agent. Ms X says she has also incurred added debt collection charges because of the Council passing the debt to the enforcement agent.
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 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)
How I considered this complaint
I have considered all the information Ms X provided. I have also asked the Council questions and requested information, and in turn have considered the Council’s response.
Ms X provided comments on my draft decision. I considered Ms X’s comments before making my final decision.
What I found
Council Tax Collection and Recovery Policy The Council’s policy details the powers available to it and its procedures in recovering unpaid Council Tax to ensure it is seeking payment from all residents for their Council Tax.
The Council says it will send correspondence to a person before it gets a Liability Order and takes associated recovery actions. Each of the correspondence issued by a Council comes with specified timescales.
The Council will first issue a Demand Notice at least 14 days before the first instalment of Council Tax is due.
If a person fails to pay Council Tax after 14 days from the date of the first instalment outlined in the Demand Notice, the Council will issue a First Reminder. The First Reminder will advise a person that if a person does not pay it will cancel the instalment plan. The full balance will become due within 14 days from the date of the First Reminder. The Council says it will move to the Summons Stage of its process after this 14-day period without warning to the Taxpayer.
The Council’s policy says that if it receives payment from the Taxpayer within the reminder timescales then the instalment arrangement can continue.
The Council says that if a person pays the instalment plan in response to the First Reminder but then a payment becomes more than 21 days overdue, it will issue a Second Reminder. The Second Reminder will advise a person that if they default on any further payments they will not be entitled to a further payment arrangement and will not receive another reminder letter.
If a Taxpayer defaults on a further payment arrangement following the Second Reminder and this becomes more than 21 days overdue, the Council will issue a Final Notice to the Taxpayer. The Final Notice will detail the full balance is due to the Council. When the Council issues a Final Notice to the Taxpayer it will also apply for a Summons at the cost of £69 to the Taxpayer.
If a person settles the balance in full before the Court date, including the £69 court cost, the Council will take no further action. But, if a person fails to settle the full balance the Council will apply for a liability order at the cost of £35.
The Magistrates Courts can grant a liability order if it is satisfied the debt shown on the summons remains unpaid. The Council will issue the liability order to the Taxpayer within three days from the date of the Court hearing. Once the Magistrates Court has granted a liability order the Council can take further recovery action such as instructing enforcement agents to act on its behalf.
The Council may pass a Liability Order to an enforcement agent after at least 14 days have passed from the date of the Liability Order.
The Council’s policy notes that it stopped all recovery action in March 2020 because of the Covid-19 pandemic and restarted recovery action in April 2021.
Enforcement agent Policy Once the Council has passed a debt to an enforcement agent, the enforcement agent must follow the Council’s enforcement policy.
An enforcement agent must contact the debtor within 10 working days of receipt of the instruction.
From the date of first contact, the enforcement agent must issue a minimum of two letters and attempt three telephone calls to the debtor within 21 days. This is the compliance stage and will incur a charge of £75 to the debtor.
If a person does not clear a debt in full, or agree a payment arrangement, during the 21 day compliance stage the enforcement agent will advance to its enforcement stage. Advancing into the enforcement stage will incur a charge of £235 to the debtor.
Council Tax and recovery action On 8 March 2018, the Council issued Ms X with an annual Council Tax demand seeking payment of £1,117.36 for the financial year 1 April 2018 to 31 March 2019. The Council had reduced Ms X’s usual Council Tax by £576.96 because of Council Tax Support. The Council detailed the first instalment was due on 1 April 2018.
The Council issued a First Reminder to Ms X on 13 April 2018 because she had not paid towards her Council Tax.
The Council’s policy allows a person 14 days from the instalment date to pay for the Council Tax. The Council sent Ms X a First Reminder on day 13 following the payment becoming due on 1 April 2018. The Council issued the First Reminder too soon; this was fault.
While the Council issued the First Reminder too soon, Ms X did not contact the Council to arrange payment until 20 April 2018. The Council would have been entitled to issue the First Reminder by this date, so this fault did not cause Ms X an injustice.
Ms X agreed a payment arrangement with the Council on 20 April 2018 to begin on 10 May 2018. Ms X agreed to pay £187.36 in May 2018 followed by £93 each month from 1 June 2018.
Ms X paid £187.36 by 11 May 2018 but failed to pay the £93 on 1 June 2018. The Council issued a Second Reminder to Ms X on 14 June 2018 for the missing payment on 1 June 2018.
The Council’s policy says it should only issue a Second Reminder if a payment becomes more than 21 days overdue. The Council issued the Second Reminder too soon as it issued this on day 14; this was fault. Ms X paid the £93 instalment on 21 June 2018. This payment was on day 21 following it becoming due. The Council should not have issued the Second Reminder to Ms X given the timescales of Ms X’s payments. The Second Reminder issued by the Council was therefore invalid.
Ms X continued to meet the terms of the payment arrangement, paying the final instalment on 4 March 2019. Ms X paid the full amount owed as detailed in the annual statement of 8 March 2018 plus an extra £10.
However, the Council issued a Council Tax adjustment on 14 January 2019 reducing her Council Tax Support to £233.94. This resulted in Ms X owing an extra £343.02 to the Council outside the payment arrangement. The Council sought payment for this extra £343.02 spread over two months in February 2019 and March 2019 but Ms X stuck to the original payment arrangement.
On 17 April 2019, the Council sent Ms X a Final Notice for the balance of £333.02 owing for Council Tax from 1 April 2018 to 31 March 2019. The Council asked Ms X to pay the full balance by 27 April 2019.
The Council should not have issued a Final Notice for this balance. The Council only raised charges for the outstanding balance of £333.02 on 14 January 2019. The Council had not issued either a First or Second Reminder for payment of this balance. The Council issuing a Final Notice on 17 April 2019 was fault. The Council should have issued a First Reminder on this date.
Ms X agreed to a payment arrangement with the Council on 25 April 2019 paying £27 each month from 15 May 2019. Ms X paid three instalments of £27 before defaulting on the payment arrangement leaving a balance owed of £252.02.
The Council issued a Summons Notice to Ms X on 5 September 2019 providing details of the court hearing and inviting Ms X to settle the balance before the hearing.
The Council should not have advanced to a Summons Notice at this time as it had failed to follow its policy by not issuing a First or Second Reminder. As detailed in paragraph 32, the Council should only have issued a First Reminder. Since Ms X had agreed to a payment arrangement and defaulted on this payment arrangement, the Council should have issued a Second Reminder instead of advancing to a Summons Notice. Advancing to a Summons Notice was fault.
The Court granted application of court fees totalling £104, for the Summons and Liability Order, on the court date. The Council added these to Ms X’s outstanding balance increasing this to £356.02. However, the Council only confirmed Ms X owed £321.02 on 1 October 2019 and failed to detail the Liability Order charge.
Ms X agreed to a further payment arrangement with the Council on 24 September 2019 with the first payment due in November 2019. Ms X paid through the payment arrangement until March 2020 paying a total of £153.02 to the Council. This left £203 outstanding including the £104 in Summons and Liability Order Charges.
Following Ms X defaulting on the payment arrangement in March 2020, the Council took no action. The Council followed its policy by stopping collection action because of the Covid-19 pandemic. I do not find fault with the Council’s actions.
On 17 March 2021, the Council issued an annual statement for Ms X’s financial tax for the forthcoming year.
In April 2021, the Council recommenced recovery action in line with its policy. On 28 April 2021, the Council sent a letter to Ms X seeking payment of the £205.35 outstanding for financial years 2018 to 2019 and 2019 to 2020. This letter was outside the Council’s normal process given the break in collection activities. I consider this was the correct approach from the Council and do not find fault.
Ms X contacted the Council on 29 April 2021 and agreed a payment arrangement for her Council Tax for the financial year 2021 to 2022. The Council set up a payment arrangement for both the current financial year and the historic debts.
Ms X contacted the Council on 19 May 2021 and disputed agreeing a payment arrangement for the historic debts and disputed the validity of the charges. Ms X made one payment towards the historic balance reducing this to £187 before cancelling the payment arrangement.
The Council explained the outstanding balance owed on 1 June 2021 and invited Ms X to agree a payment arrangement for this balance. Ms X entered into discussions with the Council about the final balance before lodging a formal complaint on 13 August 2021. Ms X complained about conflicting information from the Council and said she thought she had already repaid this balance and requested a breakdown of the outstanding balance.
The Council sent a Stage 1 complaint response to Ms X on 13 September 2021 and promised to send a statement of account for the outstanding balance owed.
On 17 September 2021, the Council sent the outstanding balance of £187 to enforcement agents. The Council was at fault for sending this balance to enforcement agents. As explained in paragraph in Paragraph 35, the Council should have issued a Second Reminder to Ms X in September 2019 and not advanced to Court Summons.
The Council took no formal enforcement action since this point before restarting its debt collection activities in April 2021. Since April 2021, the Council sent no formal correspondence to Ms X about the historic outstanding balance. When the Council decided to advance to the next stage of its procedure, on 17 September 2021, it should have issued the Final Notice requesting payment in full.
Since Ms X did not pay the balance in full at this time, the Council would have advanced to a Court hearing in September 2021. The Court would have granted the £104 in Summons and Liability Order charges at this time. As such, the Council can uphold the charges totalling £104, which it applied in 2019, for this stage of its process.
From October 2021, Ms X has regularly paid the Council’s enforcement agents for the remaining outstanding balance, including enforcement fees. Ms X has not defaulted on these payments.
The Council should not have passed this matter to its enforcement agents as it should not reached this stage in its process had it followed its policy. The Council should recall the debt from its enforcement agents and remove any enforcement agent fees applied. The Council should then refund Ms X with any overpayments she has made towards these enforcement fees.
The Council has failed to follow its debt recovery procedure on repeated occasions since 2018 whether through issuing reminders too early or using the incorrect stage of its recovery procedure. This repeated fault has caused Ms X distress and inconvenience.
Complaint handling The Council runs a two-stage complaints process.
At Stage 1 of the Council’s complaints process it says it will respond to a complaint within 20 working days. The Council says it will address all issues in the complaint within this Stage 1 complaint response.
If a person is dissatisfied with a Stage 1 complaint response they can request consideration at Stage 2 of the complaints process. The Council says it will issue a Stage 2 complaint response within 25 working days.
Ms X logged her formal complaint with the Council on 13 August 2021. Within Ms X’s formal complaint she requested a breakdown of the outstanding balance owed.
The Council provided Ms X with a Stage 1 complaint response on 13 September 2021. The Council met its complaint timescale for issuing a Stage 1 complaint response but failed to address the full issues in the complaint. The Council promised to provide a statement of account to Ms X but did not provide this until 29 September 2021, 12 working dates later; this was fault.
While the Council sent the complaint response on 13 September 2021, Ms X could not access the response from the Council. This in itself is not fault of the Council as it would have been unaware Ms X could not access this document until she contacted it on 29 September 2021.
On 29 September 2021, Ms X asked the Council to send a copy of the Stage 1 complaint response to her by post. The Council took 13 working days to send a copy of this Stage 1 response to Ms X; this delay was fault.
The Council liaised with Ms X following provision of the copy of the Stage 1 complaint response. Following these contacts, Ms X made a formal Stage 2 complaint request to the Council on 10 November 2021. The Council took 61 working days to provide this Stage 2 complaint response, on 8 February 2022. This is 36 days outside the Council’s complaint timescales and was fault.
The Council’s delays in handling Ms X’s complaint have caused her inconvenience and frustration.
Agreed action
Within one month of the Ombudsman’s final decision the Council should: Recall the debt from its enforcement agents and remove any enforcement agent fees applied.
Refund Ms X any overpayments she has made towards the debt following removal of the enforcement agent fees.
Apologise and pay Ms X £100 for the failure of it to adhere to its Council Tax recovery policy and complaints policy causing distress, frustration and inconvenience to Ms X.
Final decision
There was fault by the Council. As the Council has agreed to my recommendations I have completed my investigation.
Investigator's decision on behalf of the Ombudsman