Islington Council has accepted criticisms made by the Local Government and Social Care Ombudsman (LGSCO) over the way it tried to recover historic business rate debts.
It was investigated by the LGSCO following its attempts to recover debts going back to the early 2000s despite the person involved telling them she was not liable.
The council delayed trying to track down the payments for 16 years, with the LGSCO finding it at fault as this meant the person concerned no longer had any evidence with which to defend themselves.
LGSCO Michael King said: “While councils have every right to pursue people who do not pay their tax or business rates, they should also do this without undue delay and not let debts drift to such an extent.
“Any decision to pursue an historic debt should be based on sound evidence it is fair, appropriate and reasonable to do so.
“To take someone to court for bankruptcy is a very serious matter and, in the Haringey case, the council based its decision on a flawed assessment. This has had significant financial and emotional consequences for the woman."
Islington council agreed to pay £100 to the person concerned to acknowledge the avoidable time, trouble and frustration it caused.
Haringey council agreed to pay over £1,000 to a woman against whom it started bankruptcy proceedings for business rates of more than £50,000 based on an incorrect assessment of her assets.
An Islington council spokesperson said: “We accept the ombudsman’s findings.
“We are also reviewing our council tax and business rate collection policies to take the findings into account.”