Reference: FS50619844
Freedom of Information Act 2000 (FOIA)
Decision notice
Date:
6 February 2017
Public Authority:
Wandsworth Council
Address:
The Town Hall
Wandsworth High Street
London
SW18 2PU
Decision (including any steps ordered)
1. The complainant requested from Wandsworth Council (“the Council”)
information about credit balances on its business rate accounts. The
Council withheld the information under section 31(1)(a) of FOIA.
2. The Commissioner’s decision is that the Council has correctly applied
section 31(1)(a) to the withheld information and so does not require it
to take any further steps to ensure compliance with the legislation.
Request and response
3. On 29 September 2015 the complainant requested the following
information under FOIA:
“Under the Freedom of Information Act, I request a breakdown of
credit balances accrued since your earliest records, for the
amounts owing to all ratepayers within you billing area. This
information does not appear to be available via the
datasets published on your website. Please include the
following information;
a) Occupier (where possible)
b) Full hereditament address
c) Rateable value
d) Property Description
1
Reference: FS50619844
e) Billing Authority Reference Number
f) Start Date of Account
g) End Date of Account
h) Value of unclaimed Credit Balance
i)) Period within which Credit Raised
I fully understand where the occupier is a sole trader, you are
prevented from supplying us with the occupier name under the
Data Protection Act. I would therefore reiterate that I am not
asking for the occupier name in the case of sole traders
and only requesting information relating to (b) to (i) above.”
4. The Council responded on 30 September 2015. It refused to provide the
requested information on the basis that it was exempt from disclosure
under section 31 of FOIA.
5. The complainant requested an internal review on 8 December 2015. The
Council provided the outcome of the internal review on 22 January 2016
in which
it maintained its original position in relation to the application of
section 31.
Scope of the case
6. The complainant contacted the Commissioner on 7 March 2016 to
complain about the way his request for information had been handled.
He specifically complained about the Council’s failure to disclose the
information that he had requested.
7. The Commissioner considered whether the Council was entitled to rely
on sections 31(1)(a) to withhold the requested information.
Reasons for decision
Section 31 – Law enforcement
Engagement of section 31(1)(a)
8. Section 31(1)(a) of FOIA states that:
“Information which is not exempt information by virtue of section
30 is exempt information if its disclosure under this Act would, or
would be likely to, prejudice-
2
Reference: FS50619844
(a) the prevention or detection of crime,”
9. The Commissioner initially considered whether the relevant criteria for
the engagement of section 31(1)(a) were satisfied. These are:
(i) whether the prejudice claimed by the Council was relevant to
section 31(1)(a);
(ii) the nature of the prejudice being claimed by the Council; and
(ii ) whether there was a likelihood of the prejudice being claimed
by the Council occurring.
(i) Applicable interest within the exemption
10. The Council argued that disclosure of the information withheld under
section 31(1)(a) would be likely to prejudice the prevention of crime. It
explained that it believed that releasing the requested information would
allow potential fraudsters to use the information to identify business
entities which were entitled to claim credits on their accounts. Once such
a business had been identified, there would be a number of avenues
open to the fraudsters to seek to obtain funds. Based on these
arguments, the Commissioner accepts that the prejudice claimed by the
Council relates to the prevention of crime.
(ii) The nature of the prejudice
11. The Commissioner next went on to consider whether the prejudice being
claimed is “real, actual or of substance”, that is not trivial, and whether
there is a causal link between disclosure and the prejudice claimed. She
is satisfied that the prejudice being claimed is not trivial or insignificant
and that there is the relevant causal link.
(iii) The likelihood of prejudice
12. The Council argued that the disclosure of the withheld information would
be likely to prejudice the prevention of crime. In the case of
John
Connor Press Associates Limited v The Information Commissioner
(EA/2005/0005) the First-Tier Tribunal confirmed that, when
determining whether prejudice would be likely, the test to apply is that
“the chance of prejudice being suffered should be more than a
hypothetical possibility; there must have been a real and significant
risk.” (para 15). In other words, the risk of prejudice need not be more
likely than not, but must be substantially more than remote.
13. The complainant noted that the Council had said that the disclosure of
the requested information would be “an invitation to be dishonest”.
However, he explained that he did not believe that it had provided any
3
Reference: FS50619844
evidence or instances where fraudulent claims had been made nor had it
shown any direct link between disclosure and fraudulent activity. Whilst
he acknowledged that the Council had a duty of care, his view was that
its refusal was based on “what ifs”.
14. The complainant went on to argue that that 90% of councils throughout
England and Wales had freely provided the requested information, many
of whom openly published the data on their websites. He queried why
the Council’s approach differed from other councils.
15. In relation to this latter point, the Commissioner is aware that some
local authorities have disclosed similar information to that requested by
the complainant. She is also aware that some local authorities have
refused to disclose this information when requested to do so under
FOIA. She is not able though to determine what percentage of local
authorities in England and Wales have or have nor disclosed similar
information to that requested by the complainant.
16. The Commissioner notes, however, that even if a significant number of
local authorities have disclosed similar information to that requested in
this case, it does not automatically follow that all public authorities
should disclose that information. She needs to consider each individual
complaint that she receives on its own particular merits, taking into
account the specific circumstances of each case and the evidence and
arguments presented to her.
17. The Council informed the Commissioner that it considered that the
publication of the requested information would be an invitation to the
dishonest. It believed that potential fraudsters could use the published
information to identify business entities which were entitled to claim
credits on their accounts. Once such a business had been identified,
there would be a number of avenues open to the fraudsters to obtain
funds. These included:
(i) Hijacking the company’s identity, before posing as the
company to claim the funds; or
(ii) Setting up fraudulent accounts in the name of the company in
order to seek a repayment; or
(ii ) Posing as the Council in order to approach the company with
relevant details of the overpayment in order to acquire
confidential information such as banking details.
18. In support of its view, the Council explained that there were new and
sophisticated methods for defrauding large quantities of money and that
fraudsters cost businesses £50 million a year by falsifying details on the
Companies House database so that they could take on the company’s
4
Reference: FS50619844
identity. It went on to explain that fraudsters carried out ‘company
hijacking’ by falsifying details on statutory paper forms to have a
legitimate company’s registered address or take on the company’s
identity. It believed that the disclosure of the detailed information
requested could provide these fraudsters with new targets and might
result in the Council paying out monies in fraudulent claims.
19. The Council argued that it would also be possible to look through the list
for those businesses which were owed significant sums and then set up
fraudulent accounts in appropriate names and apply for repayment. It
believed that the very significant amounts of money involved would
clearly make it worthwhile to set up an organised fraud to take
advantage of the situation. Whilst it acknowledged that there were
safeguards in place to stop bank accounts being opened in false names,
it was of the view that such controls could be circumvented by those
determined to commit fraud.
20. The Commissioner was informed by the Council that:
“If an individual obtained the details of credits on accounts that
had yet to be claimed there is little to stop them from attempting
to obtain the funds for themselves by writing in or completing an
application form containing their bank account details. Normally a
credit on an account is only revealed by it showing on a bill sent
directly to the liable party of the account with the credit. This is
essentially the first safeguard and reduces the risk considerably
as that information stays out of the public domain.
A suspicious refund application that resulted from a recent credit
bill being dispatched would mean contacting the applicant via
letter or email to request further proof of a genuine claim. Some
of these sums are considerable so we are cautious in ensuring
they are returned to the correct account.
[The complainant] has requested details of unclaimed credits and
by publishing that list it is automatically inviting claims which will
be fraudulent unless the genuine owner happens to spot it whilst
trawling the internet looking for their credits. In which case if
they believe they have a credit they should have contacted the
Council when originally notified.”
21. The Council raised concerns that it would not be able to assess which
were real and which were fraudulent claims without a great deal of
investigation. It noted that it did not have the necessary skills or
resources to carry out such assessments and to obtain these would
involve additional extra costs. If there was a risk of fraud, the Council
5
Reference: FS50619844
stated that it would be placed under a duty as a responsible public body
to ensure that the system was made as secure as possible.
22. The Council noted that there were already cases where fraudsters rang
or texted residents purporting to be from the local Council, Valuation
Office Agency or other company which dealt with changes to Council Tax
banding or Business Rates revaluation. Fraudsters suggested that the
rate payer is due a Council tax or Business Rates refund, then ask for
personal and bank details to allow them to process the refund or
payment. If a criminal were able to obtain the information requested on
Business Rate credits, the Council believed that it would not only assist
them in defrauding the Council but also companies who were due a
credit. It was of the view that they would be able to target those on the
list and as a result, provide details regarding the overpayment which
might convince the company that they were speaking to a Council
officer.
23. The Council also noted that fraud was a very real problem within Local
Authorities both internally and externally and referred to a recent article
concerning an officer jailed for the theft for stealing from Council tax
payers accounts.
24. The Council went on to explain that it was constantly confronted by a
variety of attempted frauds and considered that the publication of the
information requested by the complainant would represent a clear
danger of being a new avenue that fraudsters would be likely to seek to
exploit.
25. The Council confirmed to the Commissioner that its policy was to refund
all credits within 10 working days of receiving an application form which
were processed once a week using a two tier checking procedure, one
person to process the application form and one person to sign off the
credit file. In the Council’s view, the disclosure of the withheld
information would mean that it would need to put in place additional
checking processes which would risk delays to legitimate refunds and
would lead to complaints and claims for compensation on its already
stretched resources.
26. The Commissioner is reticent to pass judgement on the procedures a
public authority should put in place to try to prevent fraud in
circumstances such as this as the procedures that may be appropriate
will depend on a whole range of factors, some of which wil be specific to
a particular public authority. However, in light of the explanation
provided by the Council of its handling of requests for business rate
rebates, it does not appear to the Commissioner to be a relatively
straightforward and inexpensive task for it to make effective changes to
its verification procedures for refund claims so as to counteract the risk
6
Reference: FS50619844
of fraud as a result of the withheld information being placed in the public
domain.
27. As part of its arguments, the Council made reference to the decision of
the First-Tier Tribunal in
London Borough of Ealing v The Information
Commissioner (EA/2016/0013) in which the Tribunal considered the
application of section 31(1)(a) to an identical request for information to
that made by the complainant in this case. However, the Commissioner
notes that the Upper Tribunal in
London Borough of Ealing v The
Information Commissioner (GIA/2360/2016) has recently set aside the
decision of the First-Tier Tribunal and remitted the matter for
redetermination by an entirely differently constituted First-Tier Tribunal.
Consequently, the Commissioner has not taken into account the views
expressed by the First-Tier Tribunal in its judgement in coming to her
decision.
28. As already noted, some of the information requested by the
complainant, particularly the amount of credit accrued on a particular
business account, is information that the Council uses as part of its
security procedures in attempting to prevent fraudulent claims being
made and in order to try to prevent any that are made being successful.
As a consequence, the Commissioner accepts that the disclosure of the
withheld information would facilitate an increase in fraudulent claims
and make it more difficult for the Council to identify any such claims.
Therefore, in light of this, the Commissioner is satisfied that the
disclosure of the requested information would be likely to prejudice the
prevention of crime. She consequently accepts that section 31(1)(a) is
engaged. As it is a qualified exemption, she went on to consider whether
the public interest in maintaining the exemption outweighs the public
interest in disclosure.
Public interest test
Public interest arguments in favour of disclosing the information
29. The complainant informed the Commissioner that he did not believe that
the arguments provided by the Council were a valid basis for withholding
the information requested. In his view, this could be perceived as the
Council retaining monies that did not belong to it, but belonged to the
public, and hiding behind legislation in order to do so.
30. The complainant noted that the Council had argued that the provision of
the requested data provided minimal benefit to the general public. He
disagreed with this statement on the basis that the Council held £2.5
million belonging to the public. He believed that it was therefore very
much in the public interest to disclose the information. He queried why,
if the Council actively pursued ratepayers regarding credits, as it had
7
Reference: FS50619844
said that it did, the value of credits held by the Council was so high. He
informed the Commissioner that his research suggested that many
councils within London boroughs did not actively pursue the refund of
overpayments and that, in the main, it was the London boroughs (ie
those retaining the most monies) that refused to disclose the
information requested.
31. The Commissioner notes the complainant’s arguments in relation to the
Council’s decision to withhold the requested information. With regard to
his point about the total amount of business credit owing at the time
that he made his request, the Commissioner would observe that this
figure will include credit owing to sole traders, which is outside the
scope of the request. It may also include large amounts of credit owing
to a small number of businesses. Additionally, it will presumably include
credit owed to a significant number of businesses which have been
informed by the Council that a refund is due and from which the Council
is awaiting receipt of a completed claim form.
32. As regards the complainant’s argument that his research suggested that
many local authorities in London did not actively pursue the refund of
overpayments, the Commissioner is not in a position to confirm whether
his research is correct. In any event, she is required in making her
decision to consider the circumstances that specifically exist in relation
to Wandsworth Council, which has explained to her the steps that it
takes to ensure that businesses that have a credit balance on their
account are made aware of this and encouraged to claim a refund of
that credit. In the absence of clear evidence to the contrary, the
Commissioner has to accept the Council’s explanation of its relevant
procedures and accept that those procedures are followed by its officers.
33. The Council acknowledged that there was a public interest in it being
open and transparent in respect of public funds. It explained that it was
for this reason that it disclosed to the complainant the total business
rate credits that it held, which, it believed, allowed for transparency in
respect of public funds without incurring the risk of the fraudulent
activity that it had identified. It was of the view that the disclosure of
the company names and associated details that had been requested
provided minimal benefit to the general public. It noted that it actively
pursued companies regarding the credits on their accounts and so there
would be no benefit to the companies in credit, or to the public at large,
from the disclosure of the requested company names and associated
details.
34. The Council explained that when an account first went into credit,
companies were informed of the status of their account and provided
with a refund form to complete and return to it. A credit note was
automatically issued in order to notify the ratepayer/company. If they
8
Reference: FS50619844
paid by Direct Debit and their account was live, then the credit would be
refunded automatically by BACS. The Council confirmed that the credit
balances were being reviewed on an ongoing basis and further to the
initial credit notes raised when the credit was created, follow up notices
were sent and would continue to be sent. It explained that this was a
continuous process as the number of accounts in credit varied on a daily
basis. In the Council’s view, this on-going process allowed for credits to
be claimed in a timely manner by ratepayers through a secure process.
35. Commenting on the efficiency its system in ensuring that businesses
claimed money that was owed to them, the Council explained that
credits normally occurred when a business had closed down or moved
and overpaid business rates, although equally backdated credits could
be created through revaluation changes that included periods when
several businesses may have been in occupation over a number of
years. It went on to explain that it was possible that some businesses no
longer existed or had been dissolved. The Council informed the
Commissioner that it made every effort to write to the last known
address or to the insolvency practitioner, who often claimed the credits
months or years after the Council had contacted them because of delays
in their processes. The Council stated that it was consistently active in
resourcing credit tracing and that it worked hard to refund all that were
due. It believed that its system was effective and up to a good standard.
36. The Council acknowledged that there was a public interest in disclosure
to provide some transparency to the records that it held in respect of
the administration of business rates in the borough. It believed that the
information could be of interest to a very small minority of the public
who might be entitled to a refund and had somehow failed to receive the
Council’s notifications and reminders of their credit balance, as it might
enable them to exercise that entitlement. However, it believed that this
was outweighed by the wider public interest in maintaining the
exemption.
Public interest arguments in favour of maintaining the exemption
37. The Council argued that there was a public interest in ensuring that
monies from the public purse, such as rebates on business accounts,
were not fraudulently claimed and also a public interest in not making it
easier for fraud to be committed.
38. The Council also argued that its current verification procedure for refund
claims was simple and cost effective. It believed that disclosure of the
requested information would result in additional verification processes
needing to be implemented at additional cost to the public which
appeared disproportionate to the benefits that would accrue from
disclosure. The additional verification procedures would also be likely to
9
Reference: FS50619844
slow the verification process, resulting in detriment to the genuine
ratepayer which would be contrary to the public interest.
39. In relation to any new verification processes that might be needed, he
Commissioner was informed by the Council that these would be likely to
require the production of additional documents by those claiming a
rebate which would place a new administrative burden on the majority
of those legitimate claimants that did not currently exist. This would be
compounded by the fact that the level of scrutiny of those documents
would be higher than at present, given the increased suspicion that
some of the claims (and associated documents) might well be
fraudulent. The result would be that a new verification process would be
likely to slow the rate at which credit balance claims could be considered
and refunded, causing delay in all refunds and the likelihood of
complaints, which would further burden the Council’s limited resources.
40. Overall the Council considered that disclosure of the requested
information would result in the need to implement disproportionate
steps and additional expense to the public purse to counter an increased
fraud risk that did not exist at present. It did not consider this to be in
the public interest.
41. The Council argued that a final factor that needed to be considered was
the cost consequences to it of a successful fraudulent claim. It pointed
out that in the event of a successful fraudulent claim, it would:
(i) have incurred the cost of paying out to the fraudster;
(ii) remain liable to the legitimate rate payer for an equivalent
amount, raising the prospect of paying out twice; and
(ii ) be faced with the cost (legal and incurrence of internal
management time) of seeking to recover the funds wrongly paid
to the fraudster.
42. In the Council’s view, it would not be in the public interest to expose it
to such potential costs and expenses given that they would be funded
from the public purse.
Balance of the public interest arguments
43. The Commissioner recognises the public interest in transparency and
openness in relation to the procedures and decision making of public
authorities and that the disclosure of the requested information might to
some extent help to increase openness and transparency in relation to
the Council’s collection of taxes and the management of finances. The
withheld information would provide the public with more information
about the amounts of unclaimed business rate credits and would, more
specifically, identify those companies that had to date failed to claim
10
Reference: FS50619844
back credits on their business rate accounts. However, the
Commissioner notes that the former more general public interest could
be largely met by the release of information about business rates credits
which did not identify individual accounts, for example, by providing
total figures for business rate credits.
44. The Commissioner has already noted the Council’s explanation that it
sent notices to companies that had a credit on their accounts with
instructions on how to claim refunds that were owing and also the steps
that it took to remind relevant companies that did not initially make a
refund claim.
45. The Commissioner also notes that the disclosure of detailed information
about rate rebates owed to specific businesses would not benefit the
public as a whole but only businesses that had outstanding rebates due.
She assumes that efficient businesses would generally be able to
identify when they were owed money by the Council and be able to
claim that money back relatively quickly, particularly in light of the
attempts that the Council has explained that it makes to alert them to
any rebates that are owed and facilitate the claiming of those rebates.
Consequently, the number of businesses potentially affected by any
disclosure should not be large. In light of this and the attempts that the
Council appears to make to contact businesses that are owed rebates
and to get them to claim those rebates, the Commissioner views the
public interest in the disclosure of the requested information as limited.
46. In this particular case, the Commissioner accepts that the Council has
provided strong arguments as to how the disclosure of the requested
information would be likely to prejudice its attempts to prevent
fraudulent activity in relation to the claiming of refunds on its business
rate accounts. This inevitably creates a significant public interest in
favour of withholding the requested information.
47. In light of this, she believes that the public interest in maintaining the
exemption outweighs the public interest in disclosure. She has
consequently determined that the Council correctly applied section
31(1)(a) to the withheld information.
11
Reference: FS50619844
Right of appeal
48. Either party has the right to appeal against this decision notice to the
First-tier Tribunal (Information Rights). Information about the appeals
process may be obtained from:
First-tier Tribunal (Information Rights)
GRC & GRP Tribunals,
PO Box 9300,
LEICESTER,
LE1 8DJ
Tel: 0300 1234504
Fax: 0870 739 5836
Email
: xxx@xxxxx.xxx.xxx.xx
Website:
www.justice.gov.uk/tribunals/general-regulatory-
chamber
49. If you wish to appeal against a decision notice, you can obtain
information on how to appeal along with the relevant forms from the
Information Tribunal website.
50. Any Notice of Appeal should be served on the Tribunal within 28
(calendar) days of the date on which this decision notice is sent.
Signed ………………………………………………
Rachael Cragg
Group Manager
Information Commissioner’s Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF
12
Document Outline