Summary: Miss X complained the Council wrongly billed her for a council tax payment which she says she has already paid. Miss X says the Council’s actions caused her avoidable frustration and worry. We found fault by the Council. The Council has agreed to apologise to Miss X and reduce the backdated arrears on her council tax account.

The complaint

1. Miss X complained the Council wrongly billed her for a council tax payment which she says she has already paid. Miss X says the Council’s actions caused her avoidable frustration and worry. She would like the Council to trace the payment and resolve the matter.

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The Ombudsman’s role and powers

2. 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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. Service failure can happen when an organisation fails to provide a service as it should have done because of circumstances outside its control. We do not need to show any blame, intent, flawed policy or process, or bad faith by an organisation to say service failure (fault) has occurred. (Local Government Act 1974, sections 26(1), as amended)
4. When considering complaints, we make findings based on the balance of probabilities. This means that we look at the available relevant evidence and decide what was more likely to have happened.
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 discussed the complaint with Miss X and considered the information she provided.
7. I made enquiries to the Council and considered the information it provided.
8. Miss X and the Council had the opportunity to comment on a draft of this decision. I considered their comments before making a final decision.

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What I found

Council tax

9. The Local Government Finance Act 1992 gives local authorities the power to levy and collect a dwelling tax. This is known as council tax.
10. The council tax bill for the year is due on 1 April. A council will usually collect payment through monthly instalments. If the liable person misses any instalment, the council will send them 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).
11. In exceptional circumstances, councils can effectively write off some or all of a council tax debt by using their discretionary powers under S13A(1)(c) of the Local Government Finance Act 1992 (as amended).

Direct debit indemnity

12. A direct debit indemnity is a type of refund made if a direct debt has been paid in error. This could be for an incorrect amount, or a payment taken on the wrong date. If an error has not been made, the person requesting the direct debit indemnity claim may have to pay back the amount refunded.

The Council’s complaints procedure

13. The Council operates a two-stage complaints procedure. At stage one, a service manager will investigate the complaint and will aim to send a response within 10 working days of acknowledgment.
14. If the complainant is unhappy with the complaint response received at stage one, they can ask for their complaint to be reviewed. The Council aims to provide a stage two response within 20 working days of acknowledgement.
15. If the complainant remains dissatisfied with the stage two response, they can contact the Ombudsman to ask them to investigate.

What happened

16. This chronology includes key events in this case and does not cover everything that happened.
17. In March 2022, the Council provided Miss X with a notice setting out her council tax bill for the period 1 April 2022 to 31 March 2023.
18. Miss X paid her council tax bill by direct debit. The first payment for the above period was due on 1 May 2022, followed by nine subsequent monthly payments. The last payment for the above period was due on 1 February 2023.
19. On 1 February 2023, a direct debit payment of £161 was made from Miss X’s bank account to the Council, in respect of her monthly council tax instalment.
20. A few days later, Miss X complained to the Council. She said she paid her council tax in 10 monthly instalments and said the next payment was not due until April 2023. Miss X complained the Council had wrongly taken a council tax payment in February 2023. She told the Council she had contacted her bank about the payment.
21. On 8 February 2023, Miss X’s bank paid £161 back into her bank account in response to her direct debit indemnity claim.
22. On 14 February 2023, Miss X’s bank wrote to her. It said Miss X was not entitled to the £161 credited to her account because the indemnity claim she made was raised in error. The bank told Miss X it had taken immediate action and collected £161 from her account.

The Council’s complaint response

23. The Council provided its stage one complaint response on 21 February 2023. It said the council tax notice provided to Miss X in March 2022 informed her that the first monthly instalment for the current financial year was due on 1 May 2022. The Council said this was because it was required to give Miss X’s bank 14 days notice of the direct debit instruction. The Council confirmed Miss X had arranged to pay her council tax payment in 10 monthly instalments, and said the final payment was therefore due on 1 February 2023. As a result, the Council said it had taken the payment on 1 February 2023 correctly. It acknowledged Miss X’s bank had recalled the February instalment and said this left a balance of £161 to be paid.
24. Miss X called the Council on 14 March 2023. She said she had spoken to her bank who advised her it had returned the payment of £161 back to the Council. The Council asked Miss X to send evidence of the payment.
25. The Council provided Miss X with her council tax bill for the period 1 April 2023 to 31 March 2024. The bill included arrears of £161 from the previous financial year.
26. Miss X contacted the Council again. She maintained her bank told her it had taken the payment of £161 from her account and transferred it to the Council.
27. The Council told Miss X it had no record of the payment. On 10 August 2023, it wrote to Miss X and said it had been unable to locate the payment; the Council asked Miss X to provide confirmation from her bank showing the bank account number the payment was made to, and the bank’s reference number.
28. Miss X replied shortly after. She told the Council she had contacted her bank again but was advised the bank would not disclose the account number requested, due to data protection. Miss X said the Council would need to contact her bank directly so it could provide confirmation of the bank account to which the payment was made. Miss X said she was unable to provide any further evidence of the payment until the Council had contacted her bank.
29. In September 2023, the Council wrote to Miss X and said it did not have the authority to contact other banks. It said Miss X would have to contact her bank again to obtain confirmation of the transaction. The Council said in the meantime, it had placed a hold on Miss X’s council tax account.

What happened next

30. Miss X received a council tax bill for the period 1 April 2024 to 31 March 2025. The bill included arrears of £161 from a previous financial year.
31. Miss X remained dissatisfied with the Council’s response to her complaint and brought the matter to us.

Analysis

32. Miss X complained the Council wrongly billed her for a council tax payment which she says she has already paid. Miss X acknowledges she made the direct debit indemnity claim in February 2023 based on a misunderstanding regarding the payment dates for her council tax instalments. She says she has made numerous efforts to obtain evidence from her bank that it made the payment of £161 back to the Council on 14 February 2023, but says she is unable to provide the information requested by the Council. The Council says it has no record of the payment made on 14 February 2023; it says it is for Miss X to obtain the information it needs to trace the payment.
33. I have reviewed the evidence provided by Miss X and the Council. The evidence confirms:
• Miss X made an indemnity claim in February 2023, but subsequently discovered this was made in error as the payment made on 1 February 2023 was made correctly.
• Miss X’s bank paid £161 into her bank account on 8 February 2023 as a result of the indemnity claim.
• Miss X’s bank collected £161 from Miss X’s bank account on 14 February 2023 as the indemnity claim was raised in error.
• The Council added arrears of £161 to Miss X’s council tax account as it considered the payment was not received.
• Miss X contacted her bank to request evidence the payment was made to the Council. She obtained bank statements showing the payment of £161 on 1 February, its refund on 8 February, and its collection again on 14 February 2023.
• Miss X told the Council it could contact her bank directly to obtain confirmation of the payment details.
• The Council told Miss X it did not have the authority to contact her bank, and Miss X should provide the information required to trace the payment.
• The Council made several attempts to search its records to locate the payment but was unsuccessful. As a result, it has retained an amount of £161 on Miss X’s council tax account as arrears.
34. As previously stated, when considering complaints, we make findings based on the balance of probabilities. This means we look at the available relevant evidence and decide what was more likely to have happened.
35. On the balance of probabilities, the amount of £161 collected from Miss X’s bank account on 14 February 2023 was made to the Council. This is because:
1. The payment of £161 on 1 February 2023 was made to the Council. This is confirmed by the bank statement and shows a reference number that matches Miss X’s council tax account number.
2. The direct debit indemnity claim which credited Miss X’s bank account on 8 February 2023 has the same reference as the payment made on 1 February 2023 and was in relation to the payment made on this date.
3. The letter from Miss X’s bank dated 14 February 2023 says Miss X was not entitled to the credit made on 8 February 2023. It says the bank collected £161 from Miss X; this is the same amount as the indemnity claim.
4. Miss X’s bank statement shows an amount of £161 collected from her bank account on 14 February 2023; this has a reference number which starts with ‘DDI’. It is more likely than not this references the direct debit indemnity.
36. As a result, the amount of £161 collected from Miss X’s bank account on 14 February 2023 matches the amount of the indemnity claim, and has a reference number which indicates it is the reversal of the indemnity claim made by Miss X.
37. For this reason, based on the evidence outlined above and on the balance of probabilities, it is more likely than not the bank’s decision to reverse the indemnity claim meant the payment of £161 initially paid to the Council on 1 February 2024, was returned to the Council on 14 February 2023.

The Council’s attempts to trace the payment

38. The evidence shows the Council made attempts to trace the payment within its own records but was unable to locate it. I acknowledge the Council’s actions regarding this. However, the Council’s inability to locate the payment is not evidence the payment was not made; indeed, the evidence shows the payment was collected from Miss X’s bank account.
39. As previously stated, we investigate complaints about ‘maladministration’ and ‘service failure’. Service failure can happen when an organisation fails to provide a service as it should have done because of circumstances outside its control. We do not need to show any blame, intent, flawed policy or process, or bad faith by an organisation to say service failure (fault) has occurred.
40. The Council’s inability to locate the payment of £161 is service failure. This is because despite the efforts it took to trace the payment, the Council was unable to confirm to which account the payment of £161 on 14 February 2024 was made. This may be due to insufficient information regarding the transaction reference numbers; however, Miss X says her bank will confirm to the Council the account to which the payment was transferred, if the Council contacts it directly. I acknowledge the Council says it does not have the authority to contact Miss X’s bank, but Miss X has provided the Council with her consent for this, and provided the information required for the bank to disclose the account details.

The Council’s complaint handling

41. The Council provided a single response to Miss X’s complaint on 21 February 2023. The Council has confirmed this is its final response and says consideration at stage two would not yield any further resolution as it has exhausted its investigations into this matter. The Council says it deemed it unnecessary to inform Miss X of her options regarding her complaint as it had clarified the situation. It says Miss X would have been given further options if she had made a further complaint.
42. The Council has a two-stage complaints procedure. However, its complaint response did not inform Miss X of this; it did not tell Miss X she could escalate her complaint to stage two and then to the Ombudsman if she was unhappy with the Council’s response. Miss X says it was her bank who informed her she could bring her complaint to the Ombudsman.
43. I acknowledge the Council says it deemed it unnecessary to tell Miss X about her options. However, the Council should have informed Miss X of her ability to escalate her complaint if she remained dissatisfied with the Council’s response. Although the Council considered it had clarified the situation, Miss X remained dissatisfied, as evidenced by her bringing her complaint to the Ombudsman. The Council should have informed Miss X of her right to request a stage two review of her complaint, in line with the Council’s complaints policy, and should have informed Miss X of her ability to refer her complaint to the Ombudsman once the Council’s complaint investigation was concluded. The Council’s failure to do this is fault.
44. Having identified fault, I must consider if this caused an injustice to Miss X. Miss X says the Council’s actions caused her avoidable frustration and worry about potential debt recovery action. In addition, the failure to notify Miss X of her right to escalate her complaint incurred avoidable time and trouble in the handling and consideration of her complaint.

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Agreed action

45. To address the injustice identified, the Council has agreed to take the following action within one month of the final decision:
1. Provide an apology to Miss X for the fault identified. We publish guidance on remedies which sets out our expectations for how organisations should apologise effectively to remedy injustice. The organisation should consider this guidance in making the apology I have recommended in my findings;
2. Reduce the backdated arrears as shown on Miss X’s council tax account by £161;
3. Make a symbolic payment of £100 in recognition of the frustration and time and trouble incurred as a result of the fault identified, and
4. Remind staff to make complainants aware that they may request a stage two review of their complaint if they remain dissatisfied with the stage one response, and that they may refer their complaint to the Ombudsman if they remain dissatisfied with the Council’s final response.
46. The Council should provide us with evidence it has complied with the above actions.

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Final decision

47. I have found fault by the Council and the Council has agreed to take the above action to resolve this complaint. I have therefore concluded my investigation.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman