Summary: Mr X complained about the Council’s decision making on his business rates’ liability causing him financial loss and distress. We found fault in the Council’s communications that does not affect its decision on liability. We recommended the Council provide Mr X with an apology and pay him £150 for time and trouble.

The complaint

1. Mr X complains about the Council’s decisions on his business rates’ liability. He says he has missed out on rates relief and grants. Further that he has spent time providing evidence to the Council that it has ignored and suffered distress.

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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 an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. 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”.
5. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)
6. The law says we cannot normally investigate a complaint when someone could take the matter to court. However, we may decide to investigate if we consider it would be unreasonable to expect the person to go to court. (Local Government Act 1974, section 26(6)(c), as amended)

7. 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)

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How I considered this complaint

8. I spoke to Mr X and I reviewed documents provided by Mr X and the Council.
9. I gave Mr X and the Council an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

Liability for business rates

10. The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer:
• occupiers
• owners, and
• persons named in central rating lists.
11. Case law says the four conditions of rateable occupation are:
• actual occupational possession
• exclusive occupation or possession
• occupation or possession which is of some value or benefit to the occupier/possessor
• occupation or possession which has a sufficient quality of permanence.
12. The case law on rates liability is highly technical. It is for a council to decide who is the correct liable ratepayer. However, the Ombudsman can consider if a council has followed a proper decision making process.
13. The question of liability is decided in the magistrates’ court, as a defence against the grant of a liability order. These complaints are within our jurisdiction because the complainant is only ever the subject of the magistrates’ court proceedings – they cannot resort to court at their own instigation. However, once court action begins it is for the court to decide on liability and the complaint is then outside of our jurisdiction.

Small business rates relief

14. You can get small business rate relief (“SBRR”) if:
• your property’s rateable value is less than £15,000 and
• your business only uses one property.
15. If you use more than one property, you will keep getting any existing relief on your main property for 12 months after acquiring your second property.
16. You can still get small business rate relief on your main property after this if:
• none of your other properties have a rateable value above £2,899 and
• the total rateable value of all your properties is less than £20,000 (£28,000 in London)
17. SBRR only applies to occupied businesses. It is for a council to decide if a business is in rateable occupation. However, the Ombudsman can consider if a council has followed a proper decision making process.

Business grants

18. In response to the COVID-19 pandemic the Government initially introduced two grant schemes to support businesses. The Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes” (March 2020).
19. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
20. Funding was payable to the person recorded as the ratepayer in respect of the business on 11 March 2020. However, where a council had reason to believe the information they held about the ratepayer on 11 March was inaccurate, they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.

Principles of good administrative practice

21. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we expected similar standards from councils, even during crisis working. The following points are relevant in this case.
• The basis on which decisions are made and resources allocated, even under emergency conditions, should be open and transparent.
• Decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.

What happened

22. The Council recorded third parties as the ratepayers at unit 2 and unit 3 at Address A.
23. In April 2020 Mr X contacted the Council seeking a business grant for unit 2.
24. In May the Council asked Mr X for the business’ bank details. It said if Mr X was not named on the rates account it also needed evidence of occupation such as a signed tenancy agreement or utility bills.
25. Mr X sent the Council bank details and a lease agreement.
26. The Council noted Mr X provided a lease for unit 2 and asked him to confirm which property he wanted to register. It also asked for further evidence to prove occupancy, specifically:
• Full business address;
• Applicant full name and trading name;
• Ltd company name and companies house number (if applicable);
• Full copy of signed lease;
• Landlord address and phone number/email;
• Proof of rent;
• Utility bills in applicant/company name;
• Public liability insurance;
• Date of occupation;
• Evidence of trading eg trading accounts, supplier invoices, bank statements;
• Address of any other occupied business;
• Any other documentary evidence of occupation;
• Reason why he did not register for business rates earlier.
27. It said it would not amend the account until all this information was provided.
28. The Council did not say why it needed this further information or why it had requested a lease again.
29. In June Mr X emailed the Council and provided:
• Full business address;
• Applicant full name and trading name;
• Said ltd company name and companies house number was not applicable;
• Confirmed lease already provided;
• Landlord address now provided;
• Proof of rent – Council should check with his landlord or accountant;
• Utility bills – there was no gas meter and he had a sub meter for electricity (so no bills in his name);
• Public liability insurance – did not have as not needed;
• Date of occupation- accountant letter attached confirmed date ;
• Evidence of trading- accountant letter confirmed trading and photo of shop sign also attached;
• Address of any other occupied business – one address provided;
• Reason why he did not register for business rates earlier – registered last year but no response.
30. The Council has provided its notes of a phone call with Mr X on 10 June. The Council told Mr X a third party had provided evidence to register for rates at unit 2 and so it needed to investigate the matter further. It asked Mr X if he occupied unit 3 and Mr X confirmed he left unit 3 some time ago.
31. Further to the phone call the Council asked Mr X to provide:
• Telephone number;
• Full copy of signed lease;
• Landlord address and phone number/email;
• Proof of rent;
• Evidence of trading;
• Address of any other occupied business including any ltd company he acted as director of;
• Dated photos of inside and outside the property;
• Date he left unit 3.
32. The Council did not comment on the information already provided by Mr X or explain why it had requested some of the same information again.
33. Mr X then sent the Council further contact details for his landlord.
34. The Council has provided its notes of a phone call with Mr X on 19 June. Mr X said he had already sent all the evidence requested. The Council clarified:
• Mr X had provided a full copy of the lease.
• He had not provided proof of rent or proof of trading. Mr X said the Council should ask his accountant. The Council confirmed it had sent an email but had no reply. It was for Mr X to follow this up and get the evidence.
• Mr X provided information about one other business but the Council had information about further businesses run by Mr X and that could affect his eligibility for a grant.
• Mr X’s one photo of a billboard was not adequate and so the Council wanted dated photos of inside and outside the property.
• Mr X did not confirm the date he left unit 3. He wanted the Council to ask his landlord but it was not up to the Council to do this.
• Mr X asked for the Council to visit the site. But it may not need to do this if he provided the evidence requested and it could not say when such a visit would be possible.
35. On 3 July the Council wrote to Mr X setting out the gaps in the evidence provided to date as follows:
• Lease named business only which was not a legal entity- must be in his name or ltd company name;
• Description of business and operations at property required;
• Address of any other occupied business required;
• Proof of rent – Mr X says he pays in cash so it would expect him to have receipts;
• Supply or confirm he cannot supply bills for water, electricity, gas and phone;
• Evidence of trading required.
36. Mr X told the Council he was surprised by its request as he had already provided most of the evidence. He felt the lease provided should be adequate. He gave details of rent paid, confirmed he had no public insurance and referred the Council to previous emails.
37. The Council apologised that it had not noticed the issue with the lease earlier. It explained it had requested the same evidence again as Mr X had still not provided it.
38. Mr X sent the Council a cover sheet to the lease agreement to show he was named on it.
39. On 5 August the Council acknowledged this. But said Mr X had not provided enough evidence to support that he was liable for rates or to demonstrate he actively occupied the business. It warned of the scheme closing date on 28 August.
40. Mr X’s local councillor then contacted the Council on his behalf.
41. On 21 August the Council told the councillor it now had information that Mr X owned units 2 and 3. However evidence of trading still remained an issue. It also wanted photos to show the inside and outside of units 2 and 3.
42. Mr X sent the Council photos and explained why he felt he had already provided other evidence. On 27 August he requested a review of the Council’s decision.
43. The Council has provided its record of a phone call with Mr X on 28 August. During the call the Council realised Mr X had numbered the units differently to the Council and this had resulted in confusion over liability.
44. The Council’s records show on 17 September 2020 it concluded that Mr X occupied unit 3, not unit 2 as he referred in correspondence. It opened a business rates account for Mr X at unit 3 effective from 2019, applied SBRR and paid a small business grant.
45. The Council’s records show on 30 September it noted Mr X owned another property with a higher rateable value and so it switched the SBRR to that property. Mr X was only eligible for one small business grant which had been paid.
46. The Council’s records say on 23 October Mr X complained it had only paid one grant and it replied to explain why.
47. In response to enquiries the Council said it required a higher standard of evidence to register a company liable for business rates if it meant they would qualify for a grant and they had not previously registered despite claiming to have been in occupation for a significant period of time.
48. In comments on a draft of this decision Mr X said:
• The Council had issued a witness summons for him to appear at court;
• The Council had not explained why it held him liable for business rates when everyone else got rates relief.
49. In comments on a draft decision the Council said:
• The team was no longer dealing with grant applications and did not expect to do so in future; therefore the service improvement recommendation was not appropriate.
• Mr X’s lack of knowledge of the correct unit number contributed to the amount of correspondence exchanged.
• The Ombudsman issued a decision in April 2021 not to investigate Mr X’s complaint that only one of his properties was entitled to a business grant because of a lack of evidence of fault (20012894). The Ombudsman also noted the Council had already offered an explanation for its decision.
• It enclosed a copy of the correspondence sent to Mr X on 23 October 2020. This explained only one of his properties was entitled to SBRR and therefore only this one property was eligible for a Small Business Grant. As it had already paid him one grant no further payment was due.

Findings

50. The Ombudsman will decide whether to investigate a complaint based on the information available at the time. I am not bound by the earlier decision not to investigate.
51. Mr X complained to the Ombudsman slightly more than 12 months after the Council’s last response of 23 October 2021. However, any fault or injustice arising from the Council’s decision to refuse and then remove rates relief from his business at unit 3 is ongoing. I therefore consider it appropriate to exercise discretion to investigate the complaint in full.
52. Mr X was not the recorded ratepayer at unit 2 when he sought to register for rates and request a business grant. Upon his contact, the Council took steps to identify the correct ratepayer, in line with Government guidance.
53. However, the Council did not communicate clearly with Mr X. It asked him for evidence without explaining why it needed it. It also rejected evidence provided without explaining why it was inadequate. This is fault. Mr X was put to avoidable time and trouble in communications with the Council because he was unclear what he needed to provide and why. This is injustice to Mr X. That Mr X did not know the correct unit number does not excuse the Council’s poor communications. However, given the Council is no longer dealing with grant applications I have removed the associated service improvement recommendation.
54. The Council finally resolved Mr X occupied unit 3, it opened a rates account and applied SBRR and a small business grant. However, the Council was wrong to take this action. This is fault. This is because Mr X used more than one property and only the main property could receive SBRR. Further only the business in receipt of SBRR was eligible for a grant.
55. I note the Council corrected its error on 30 September, by switching the SBRR to Mr X’s main property and confirming only one grant was payable to Mr X and this had been paid. It also explained this to Mr X on 23 October 2020. I am satisfied with the actions taken by the Council to remedy its fault.
56. The Council has since taken court action against Mr X for payment of his outstanding business rates bill on unit 3. It is now for the courts to decide on Mr X’s rates’ liability and I have no jurisdiction to comment further.

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Agreed action

57. To remedy the injustice set out above I recommend the Council carry out the following actions within one month of the date of my decision:
• Provide Mr X with an apology for its poor communications;
• Pay Mr X £150 for time and trouble.
58. The Council has accepted my recommendations.

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Final decision

59. I find fault in the Council’s communications with Mr X. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman