Summary: There was no fault in how the Council handled business rates issues affecting a company.

The complaint

1. Mr X acts for a company (‘the Company’) in making this complaint. Mr X says the Company did not receive written information from the Council about business rates for two properties. And, while the Company was paying, and trying to clarify issues with the Council, it took enforcement action for non-payment of business rates. Mr X also says the Council wrongly increased business rates on one of the properties.

2. Mr X says the Council’s actions caused the Company distress, financial loss and damaged its business reputation. Mr X wants the Council to refund the enforcement charges added to the Company’s business rates accounts. Mr X also seeks compensation for the distress and losses arising from the Council’s unnecessary recovery action and wrong rate increase.

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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)

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How I considered this complaint

5. I have:

• considered the written complaint and supporting papers received from Mr X;
• talked to Mr X about the complaint;
• asked for and considered the Council’s comments and papers about the complaint;
• shared the Council’s comments and papers with Mr X; and
• shared a draft of this statement with Mr X and the Council and considered their responses.

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What I found

Background

6. Business rates are a local tax on business premises. To calculate business rates, you take a property’s ‘rateable value’, as set by the Valuation Office Agency (VOA), and the ‘rate poundage’, set by parliament. People can challenge the VOA’s decision on the rateable value of their property. While someone is challenging a VOA decision, they remain liable to pay business rates.
7. Councils are responsible for billing and collecting business rates. The law says notices about business rates may be posted to “the place of business (or, as the case may be, one of those places of business)” of the person liable to pay business rates on a property.
8. If people do not pay their business rates, councils will send a reminder. If payment is still not made, councils may issue a summons seeking a Liability Order from the Magistrates Court. A Liability Order, if issued by the court, will confirm the amount owed and the person liable to pay that amount.
9. Councils may ask enforcement agents to recover the debt due under a Liability Order. The law sets out the charges enforcement agents can make when recovering the debt. On receiving a case and contacting the debtor, the agent can add a £75 charge to the debt. On visiting the property, the agent can add a charge of £235 plus 7.5% for debts over £1,500.

What happened

10. The Company has business premises in the Council’s area. The Council says it posted a business rates bill to one of the Company’s premises (‘the Property’). Mr X says the Company did not receive the bill but, a few weeks later, the Company made a business rates payment to the Council. The Council says it received a payment but not of the full amount due for the first business rate instalment on the Property. The Council then sent a reminder notice for the rest of the instalment and said court action might follow if payment was not made. About three weeks’ later, the Council applied for a Liability Order for payment of the year’s business rates for the Property. The Council added its costs and a court fee to the sum sought. Meanwhile, the Company made two payments, one around the date of the court summons. The other payment came the day after the court granted the Liability Order.
11. The Council asked enforcement agents (‘the Agents’) to recover the money due under the Liability Order (‘the Debt’). It was about three months since the Council had issued the business rates bill for the Property. The Agents wrote to the Company seeking payment of the Debt. The Agents also added a £75 charge to the Debt.
12. A representative of the Company (‘R’), telephoned the Agents. Mr X and R say the Agents asked for (and they quickly paid) the amount outstanding for the three months since the Council issued the business rates bill, plus the Agents’ £75 fee. Mr X says the Agents agreed to instalment payments for the rest of the Debt. The Agents say these was no arrangement to pay the Debt by instalments.
13. About a week later, the Agents visited the Property. Mr X says the Agents agreed the Company could make an immediate payment of about half the Debt. The same day, the Council’s notes show it received a telephone call from the “ratepayer” for the Property. The notes say the caller states the Agents have been sent a payment and the caller is to email the Agents asking for instalment arrangements to pay the remaining Debt.
14. The Council’s notes show it received a further telephone call from R two days later. The notes refer to R saying the Agents have advised that if the Company makes a payment, it can pay the remaining Debt by instalments. The Council’s notes also say the computer records show full payment of the Debt is due. And, when the Agent visited the Property, the ratepayer agreed to immediately pay about half the Debt with the rest due at the end of the week. The Council’s records say its officer told R it would check with the Agents to confirm what was said.
15. The Agents continued to seek payment and added a 7.5% charge to the Debt. R complained to the Council and the Agents. R asked to pay the remaining Debt over the next six months and for the removal of the 7.5% charge.
16. The Agents telephoned R. The Agents denied arranging for instalment payments and confirmed full payment of the Debt was due. R said the Agents should stop recovery action until they produced recordings of their earlier telephone conversations. R said the Company would pay the remaining Debt in six monthly instalments. R sent further emails to the Council and the agents and, at the end of the month, R made a payment.
17. About a month after R complained, the Council responded to the complaint. The Council explained it had a 10 days target for responding to emails and apologised for not doing so. The Council said it had no record of the Company contacting it after it issued the business rates bill, reminder, or court summons. The Council said if the Company had said it was struggling to pay, it could have reduced the monthly instalments by extending the payment plan from 10 to 12 months. The Council also said once it had a Liability Order, the year’s business rates were payable in full. The Council said, if asked by the bill payer, it had discretion to offer a payment arrangement after a Liability Order. But, the Company had not asked for an arrangement and it had passed the case to the Agents for recovery of the full amount. The Council said it did not record telephone calls. And, its Agents said they had told R payment in full was due and denied agreeing to instalment payments. The Council confirmed the how much of the Debt remained unpaid and confirmed it should be paid within the next few days. The Council said it had acted correctly and in line with the law to recover the business rates. The Council asked R to get in touch at the start of the next business rates year if the Company could not pay the billed instalments.
18. The Agents also responded to R’s complaint. The Agents said they had acted on instructions from the Council and their charges were in line the law. The Agents confirmed the Company had agreed to clear the Debt within the next few days.
19. R continued with the complaint. The Council replied saying the business rates bill, reminder and other documents sent to the Company had not come back as ‘undelivered’. It could therefore consider those documents ‘properly served’ and continue to recover the unpaid business rates. The Council said it would, as a goodwill gesture, ask the Agents to refund their 7.5% charge.
20. The Company then received a notice from the VOA that significantly increased the rateable value of the Property. Mr X contacted the Council about the increase. The Council, while not obliged to do so, said it would not act on the new rateable value while Mr X appealed the VOA’s decision. (The VOA later reduced the rateable value of the Property.)
21. Mr X then wrote to the Council (‘the Letter’):

• about how badly its handling of business rates payments for the Property had affected the Company’s businesses;
• asking it to pay the Company’s costs in challenging the VOA’s decision to increase the rateable value of the Property;
• saying he had received a summons for non-payment of business rates for another business, which gave the wrong address;
• asking for a refund of enforcement agents’ fees on recovery action taken for non-payment of business rates on another of the Company’s business premises (‘Property Two’); and
• asking for compensation for loss of sales due to works in the road outside Property Two.

22. The Council replied to the Letter saying:

• it had acted in line with the law to recover business rates for the Property and refunded the Agents charges as a goodwill gesture and not because it had acted wrongly;
• it was not responsible for setting the rateable value of the Property and had used its discretion not to act while the Company appealed the VOA’s decision;
• it was only since sending the Letter, Mr X had confirmed which business was liable for the unpaid business rates it was now trying to recover;
• it had not passed the business rates accounts for Property Two to enforcement agents and so there were no agents’ charges on those accounts; and
• no compensation was available for the roadworks outside Property Two.

Consideration

Lack of information about business rates for the Property

23. The Council has provided computer print outs showing it issued a bill, reminder and summons for the Property to the Company’s business address. This complies with the rules for sending such documents (see paragraph 7 of this statement). The Council says the Royal Mail has not returned any of the documents: I have no reason to doubt this. The Council could therefore consider the documents as properly served and to then seek a Liability Order when it did not receive the due business rate instalments. I recognise Mr X says he did not receive any of the documents. And, while this is unfortunate, I have no grounds to find this is due to fault by the Council.
24. I have also listened to recordings of telephone conversations between the Agents and R. I recognise R was asking to pay the debt by instalments. And, the Agents refer to R ‘paying what the Company can’ if it cannot pay the Debt in full. But, the Agents tell R the Debt now needs to be paid in full. I do not find the Agents asked for instalment payments or arranged for payment of the debt by instalments. Overall, I do not find fault by the Council in how it handled the Company’s business rates account for the Property.

Increased rateable value of the Property

25. The Council told Mr X is was not responsible for setting the rateable value for the Property: I agree. I have no reason to doubt Mr X incurred significant costs in, successfully, challenging the VOA’s decision to significantly increase the rateable value of the Property. And yet, those costs did not arise because of any fault by the Council. And, the Council is not at fault in refusing to pay those costs.

Other matters

26. In the Letter, Mr X said he received a wrongly addressed court summons. When I asked Mr X about this he said the Council had added a new company as using the Property. The Council said the VOA provided details of the businesses using the Property when it advised of the increase in rateable value. The Council said it used the VOA’s information to create a business rates account and, later, to prepare the summons. When Mr X received the summons and contacted it to say the Company was liable for business rates on the Property, it withdrew the summons and updated it business rates records. I recognise what happened was frustrating for Mr X. And yet, I do not find the Council acted with fault in using the VOA’s information. The Council also responded quickly to withdraw the summons and change its records following contact from Mr X.
27. The Council provided evidence it refunded the Agents 7.5% charge on the Debt for the Property. The Council also produced copy statements for business rates accounts for Property Two. These statements do not show the Council passed the accounts to enforcement agents. I asked Mr X to send me the evidence he said he held that showed the Company had paid other enforcement agent charges. I have not received any such evidence from the Mr X. I therefore have no good reason to investigate further or grounds to suggest the Council might have acted with fault here.
28. Mr X asked the Council for compensation for loss of trade while road works took place outside Property Two. The Council said it was not liable to pay compensation for loss of business. The Council has now confirmed a utility company was responsible for the works in the road. Utility companies, which include water, gas, and cable companies, have legal rights to lay, repair, and improve their pipes and cables under/in public roads. Mr X may wish to contact the utility company about any compensation claim. However, I find no fault here by the Council.

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Final decision

29. I completed my investigation finding no fault by the Council in its handling of the Company’s business rates accounts.

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Investigator's decision on behalf of the Ombudsman