Summary: The Council was at fault, because an officer did not properly explore the reason for the complainant’s call about business rates, which meant it gave him misleading advice. But this call alone should not have been enough for the complainant to believe his business had been granted an empty property exemption from business rates. Nor do we consider the business could have qualified for the exemption if it had been given different advice. There is some injustice to the complainant in the frustration caused by the Council’s fault, but the Council has already taken appropriate steps to address this. We have therefore completed our investigation.

The complaint

1. The complainant, to whom I will refer as Mr B, says the Council provided misleading information during a phone call, which led his business wrongly to believe it was receiving a three-month empty property exemption from business rates.
2. Mr B complains the business could have made itself eligible for the exemption if it had received the proper information; and that, by the time the Council informed him the rates were still due, the business had spent the money on other things. He seeks a significant reduction in the arrears to reflect the impact of the Council’s fault.

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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. If we are satisfied with a council’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)
5. This complaint involves events that occurred during the COVID-19 pandemic. The Government introduced a range of new and frequently updated rules and guidance during this time. We can consider whether the Council followed the relevant legislation, guidance and our published “Good Administrative Practice during the response to COVID-19”.

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How I considered this complaint

6. I reviewed Mr B’s correspondence with the Council.
7. I also shared a draft copy of this decision with each party for their comments.

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What I found

8. Mr B works for a marketing agency (‘the Agency’) based in the Council’s area. Its office consists of suites over several floors, each of which has an individual business rates liability.
9. At the beginning of the COVID-19 pandemic in March 2020, the Agency decided to close its office and instruct all staff to work from home. Mr B emailed the Council on 24 March to enquire about an exemption from business rates while the property was empty. The following day, he called the Council to follow up his email.
10. During the call, a Council officer said, if the Agency was sure it was eligible, it should cancel any direct debit it had set up to pay business rates, to avoid incurring bank charges if the Council attempted to take payment from an empty account. The officer also explained the Council could not obtain liability orders to pursue debtors at the moment anyway, as the courts were closed.
11. In the understanding the Council had granted the Agency a three-month business rates exemption, it cancelled its direct debit.
12. Between May and August, Mr B had an exchange of emails with the Council. As part of this exchange, the Council explained the Agency could not qualify for the empty property exemption simply by closing its office, and that the Government had specifically said that properties vacated because of COVID-19 restrictions were not to be treated as ‘empty’ for business rates purposes. The Agency was therefore still due to pay the business rates during the office’s closure, and was not exempt.
13. In response, Mr B said, had the Council given a fuller explanation at the beginning, the Agency would have moved all the furniture in the office to one floor, to allow it to claim the empty exemption on the other floors.
14. On 8 October, Mr B sent the Council an email, which it decided to treat as a stage one complaint. Mr B said the Agency had applied for “empty building rates relief” on 25 March, and that he had spoken to an officer who had said “that was fine” and that the Agency should cancel its direct debit.
15. Mr B questioned why the Council was now refusing to grant relief, and said he had received advice from the gov.uk website which confirmed the Agency was eligible, and had also received legal advice to the same effect. He explained the Agency had used the money it had saved on business rates to avoid furloughing staff. Mr B also complained the Council had not explained there were COVID-19 business support grants the Agency could have applied for.
16. The Council replied on 5 January 2021. It apologised for the delay, which it explained was because of an error in processing Mr B’s complaint.
17. The Council said, from the information Mr B had provided, it understood the Agency had vacated its office on 17 March, in accordance with Government advice, and had re-opened the office on 6 July. During that time, the office furniture had remained in place.
18. The Council said it had already explained why the Agency had not qualified for an exemption. This was because, under Government guidance, properties vacated because of COVID-19 restrictions were not ‘empty’ for business rates purposes. The Council added that the Agency had not surrendered its lease or tenancy, or removed the furniture, and in accordance with case law this meant it was occupied. It noted Mr B’s comments about his phone call in March, and apologised if he had been misled by what the officer had told him.
19. The Council explained the Agency was not eligible for either of the COVID-19 business support grant schemes, because the Agency was not in receipt of small business rates relief or part of the retail, hospitality or leisure sector. There had therefore been no reason for the Council to signpost the Agency to these schemes.
20. Mr B requested a review of the Council’s stage one response on 6 January. He reiterated the Agency would have moved the furniture to one floor if it had understood this was “a requirement” to claim the exemption on the other floors. He commented again the Agency had made financial decisions based on the savings it thought it had made, and that there was now a “£100k black hole” in its finances.
21. Mr B asked if the Council would agree a 50% reduction in the outstanding rates, as the office had been empty of staff. He also said the Agency had another office in a different area, and in that case, the local authority had granted the exemption.
22. The Council responded on 7 January. It said it had now located the recording of Mr B’s call with the officer in March 2020, and summarised their conversation. The Council commented that the officer appeared to have wrongly assumed Mr B was calling about the expanded retail discount – which reduced eligible businesses’ rates liability to £0 for 2020/21 – and which had just been announced by the Government.
23. The Council accepted the officer had been at fault, because he should not have instructed the Agency to cancel its direct debit payments, while its business rates liability remained in place. The Council apologised for this and assured Mr B the matter had been referred to the officer’s line manager. However, it noted the officer had only given general details, had not looked into the specifics of the Agency’s case, and “did not say” it would be entitled to an exemption. The Council did not accept this call had caused or contributed to a financial loss by the Agency.
24. The Council repeated its previous explanation for why the Agency did not qualify for the empty property exemption, and said it could not take responsibility for any assumption the Agency had made about its eligibility. It explained it was not bound by any other local authority’s decision on a similar case.
25. Mr B emailed the Council again on 7 January to escalate his complaint to the final (‘Chief Executive’) stage of the complaints process.
26. The Council responded on 20 April. It apologised again for the delay in its response, and offered Mr B £25 to reflect the impact of this delay.
27. The Council said the officer to whom Mr B had spoken could not have explained the eligibility criteria for the expanded retail discount, as the guidance had not yet been published. But it reiterated it had found the officer at fault for telling Mr B to cancel the Agency’s direct debit, and upheld this element of the complaint.
28. However, the Council explained again why it did not consider the Agency qualified for the empty property exemption, because of Government guidance and case law, and said it maintained this position. It therefore did not uphold this element of the complaint. The Council referred Mr B to the Ombudsman if he wished to pursue his complaint further.
29. Mr B complained to the Ombudsman on 23 April.

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Legislative background

Business rates

30. Non-domestic rates or business rates is the local tax on business premises. The primary legislation for non-domestic rates is the Local Government Finance Act 1988. The main secondary legislation concerned with collection and recovery is The Non-Domestic Rates (Collection and Enforcement) (Local Lists) Regulations 1989 and as amended.

Empty property exemption

31. Business rates do not need to be paid on empty buildings for three months after they become vacant. After this time, most businesses must pay full business rates.

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Analysis

32. Mr B complains the Council did not give him the proper information for the Agency to qualify for the empty property exemption. He considers that, if the Council had informed him the office needed to be devoid of furniture to be classed as ‘empty’, the Agency could have moved the furniture to one floor, and claimed relief on the others.
33. In law, there are several tests for what constitutes ‘rateable occupation’. This is not a simple question, and it is a matter of professional judgement for the Council to decide whether the threshold for occupation is met.
34. This said, I do not consider Mr B’s proposal – simply moving furniture from one part of the building to another – could realistically have provided a persuasive argument for the office to be considered empty, for business rates purposes. As the Council has explained, it requires only minimal evidence of occupation for a property not to be considered exempt. And I note, in particular, Mr B made clear the Agency intended staff to return in the near future.
35. Further to this, and as the Council has highlighted, the guidance published by the Government about the expanded retail discount (ERD) says:

“For the avoidance of doubt, hereditaments which have closed temporarily due to the government’s advice on COVID19 should be treated as occupied for the purposes of this relief.”

36. The ERD has never been relevant to the Agency, because it is not a retail-type business. However, I agree with the Council this point still has relevance to the Agency’s case, because it made clear the Government did not consider the temporary vacation of business premises – to comply with COVID-19 restrictions – to mean they were empty for business rates purposes.
37. On the balance of probabilities, therefore, I do not consider the Agency can be said to have missed out on the empty property exemption. It does not appear it could have qualified, regardless of what information the Council had given Mr B.
38. This said, I must question why the Council has not addressed this point in its correspondence with Mr B. It has explained, clearly, why the office did not qualify as empty in its ‘un-rearranged’ state; but it has not commented on whether Mr B’s proposal to move the furniture would have meant it qualified. This was an important part of Mr B’s complaint.
39. I therefore consider it fault that the Council did not address this point, although I do not consider it caused a significant injustice to Mr B or the Agency. This is because, as I have said, I am not persuaded the proposed furniture move could realistically have made the Agency eligible for the exemption anyway.
40. The Council has conceded it was at fault for the misinformation the officer gave Mr B on the phone on 25 March 2020. It accepts he should not have told the Agency to cancel its direct debit, although it does not accept the officer told Mr B it was eligible for the exemption, and so does not consider it contributed to the Agency’s subsequent financial decisions.
41. I have listened to a recording of this phone call. As the Council has said, it appears the officer believed Mr B was calling to discuss the ERD, which the Government had just announced. The officer suggests the Agency cancel its direct debit, “if” it considered itself eligible.
42. However, at the beginning of the call, Mr B had simply told the officer he was calling about “rates”. The officer did not seek to clarify what Mr B meant by this, nor did he ask Mr B for any specific details so he could check the Agency’s account.
43. Given the circumstances at the time, it appears reasonable to infer the officer had been dealing with a series of calls from businesses about the ERD. I can appreciate, therefore, why he seems to have assumed this was also the purpose of Mr B’s call. But, had he clarified what Mr B was calling about, it would then have been apparent they were talking at cross-purposes. This is a further point of fault with the phone call; and, in fact, I consider this to be of greater significance than the officer telling Mr B to cancel the Agency’s direct debit.
44. This said, I am not satisfied Mr B should reasonably have interpreted this phone call as confirmation the Agency had been granted the empty property exemption. It is clear the officer did not know the specifics of the Agency’s case, and Mr B did not volunteer this information either, nor explain further what he meant by ‘rates’. And, critically, as the Council has said, the officer did not tell Mr B the Agency was eligible for anything. Rather, he said “if” the Agency believed it was eligible, it should cancel its direct debit.
45. Therefore, while there was fault by the Council here, I am not persuaded this fault can be said to have caused the injustice Mr B alleges – that the Agency mistakenly believed it had been granted the empty property exemption, and made financial decisions on that basis. This misapprehension was the Agency’s own, albeit not helped by the Council’s poor handling of Mr B’s phone call.
46. I must therefore consider whether there is any other injustice arising from the misleading phone call. It is clear this has caused Mr B some frustration and distress, and, under the Ombudsman’s Guidance on Remedies, this is something for which we may recommend a person receive a financial remedy.
47. However, such remedies are typically very modest, token payments in the region of £100-300. They are not intended to provide compensation or damages, in the way a court might award. And, in this case, I am conscious Mr B is representing the Agency in his complaint, and not acting in his capacity as a private individual.
48. Taking this together, I do not consider it appropriate to recommend the Council offer a payment for frustration and distress here, because it would not provide a meaningful remedy to the Agency.
49. I have also considered whether there are any recommendations I can make for the Council to improve its service. But the Council has already confirmed it has addressed the officer’s poor handling of the phone call from Mr B with his line manager. This is not something the Ombudsman could recommend, as we have no role in personnel or disciplinary matters, and so it is positive the Council has been proactive here.
50. And, given the particular circumstances under which the phone call took place have now passed, I do not consider there is any other meaningful service improvement I can recommend. There is no reasonable prospect this fault could recur.
51. I therefore make no recommendations here.
52. I note, as an additional point, Mr B also complained to the Council it had not informed him about the Government COVID-19 business support schemes. However, I am satisfied the Council has appropriately responded to this point, by explaining the Agency would not have qualified for the schemes anyway. This is because it does not fall into the retail, hospitality and leisure sector, and because the rateable values of its office suites are above the qualifying threshold.

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Final decision

53. I have completed my investigation with a finding of fault causing injustice, but which the Council has already remedied.

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Investigator's decision on behalf of the Ombudsman