Summary: Mr X complains the Council was at fault for making his business liable to business rates for a property he had no connection with. The Council failed to follow proper procedures which led to Mr X receiving sudden and inappropriate contact from bailiffs about a debt he did not owe. The Council should make a payment to Mr X to recognise the time and trouble he spent pursuing the complaint and the distress caused by bailiff contact.

The complaint

1. Mr X complains the Council incorrectly made his business liable for business rates. It then took enforcement action and engaged bailiffs. Mr X states that his business had no knowledge of the premises concerned and the Council later accepted it acted without any evidence he was liable for business rates there. Mr X states his health suffered due to the stress of the situation and he spent days trying to resolve the matter. He complained the compensation offered by the Council did not reflect the problems the Council caused.

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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. 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

4. I spoke to Mr X and considered the information he provided. I asked the Council for information and considered its response to the complaint. I sent my draft decision to Mr X and to the council to enable both parties to comment. I considered the comments I received before I took a final decision.

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What I found

5. Mr X lives and works in Dorset. On 29 March 2019 he received correspondence from a bailiff company. The bailiffs were instructed by Birmingham City Council to chase Mr X’s company for business rates arrears of £6,438.85 on a property in Birmingham.
6. Mr X contacted the Council. He explained he had not been to Birmingham, did not run a business there and knew nothing about this business rates debt. He stated the bailiff was threatening to visit and remove goods and the situation was stressful, distressing and putting pressure on his family.
7. The Council told Mr X that a letting agent named his company as being liable for the business rates at the property concerned in 2018. The property was in Birmingham. The Council sent us a copy of the email from the letting agent. It stated Mr X’s company name, but no other details of the company were provided to the Council.
8. On 28 September 2018 the Council searched the Companies House website for Mr X’s company. It loaded the details of the company onto its records. This included Mr X’s address in Dorset.
9. The Council sent business rates bills addressed to Mr X’s property but they sent them to the Birmingham property. When the Council received no response to the bills and no payment, it issued a summons and obtained a liability order for what it believed to be a business rates debt that Mr X’s company was responsible for. All this correspondence was sent to the Birmingham property.
10. As Mr X did not have any connection with the Birmingham property he did not receive any of the bills and was unaware of what was happening.
11. When Mr X contacted the Council it attempted, without success, to speak to the letting agent and the landlord of the property. When it could not contact them, and as no lease had been received, it recalled the account from bailiffs, withdrew the summons and deleted the business rates account set up in Mr X’s company’s name.
12. In response to Mr X’s initial complaint, the Council apologised and told him it had cancelled the account and removed all charges. The Council stated it did not consider it was appropriate to make a compensation payment because the recovery action it took had been within the Revenue Section’s procedures.
13. In further correspondence with Mr X dated 16 May 2019, the Council accepted it had not acted within its procedures. It stated “It is normal practice and procedure that we would request a lease agreement, and have clearly failed to do so in this case. In addition, we should have carried out a trace of the address of your company with Companies House. Please accept my sincerest apologies for this oversight…” The Council offered Mr X £350 in compensation.
14. In reply to our enquiries the Council told us the complaint response it sent to Mr X had been wrong. It stated it had not contained the correct information about the Council’s procedures.
15. The Council provided a copy of its standard procedural guidance. The guidance states notifications about changes in liability can be taken in writing, by email or over the telephone, provided the required information is obtained. The Council noted it does not need a copy lease.
16. However, the guidance does state it is important to get the full, correct information to prevent later problems or disputes over liability. It says staff should always check the companies house register to establish the company’s registration, that it is active, the date of incorporation and registered office address. The Council’s complaint response implied it had not carried out a Company’s House check. The Council clarified that it had done a check and it had stored the results on its systems, including Mr X’s company address. Unfortunately, it did not use this information.
17. The Council acknowledged its guidance contained contradictory information about where to serve demand notices. Under ‘Information required for Billing’ the guidance suggests a demand notice can be sent to either a registered office address or to the property for which business rates is demanded. Under “Serving of a Demand Notice” it states the Council should always serve it to a company’s registered office address.
18. The Council acknowledged that Section 233 of The Local Government Act 1972 stipulates a Business Rates demand notice should be sent to the liable person’s “proper address”. Proper address is defined in the legislation as the person’s last known address or, in the case of a corporate body, the registered office. A limited liability company falls under the definition of corporate body. So, the Council should have billed Mr X’s company at the registered office address, in Dorset, found on the Companies House website.
19. Mr X told me at the time the bailiffs contacted him, he was in the process of buying a house. He stated the prospect of the debt meant that he did not feel able to offer a higher amount and he lost the property. He explained the contact from bailiffs was completely unwarranted and it had caused distress to him and his family.

Analysis

20. There was clearly fault by the Council here. The Council made Mr X’s company liable for business rates incorrectly, without sufficient information from the person making the notification. It acted with just a company name. Although it conducted a check of the company with Companies House, the Council accepted that its bailiffs were not provided with Mr X’s company address when the debt was passed to them. The Council concluded from its records that that the Council clearly made no attempt to contact Mr X’s company at the address in Dorset.
21. It is surprising that after officers checked the Company House website and found the Dorset address they did not question if Mr X’s company in Dorset was properly liable for the building in Birmingham. But, in any event the Council accepts that when it made Mr X’s company liable, the demand should have been sent to his registered office in Dorset in accordance with its procedures and the law. If the Council acted properly, Mr X would have been able to respond to the demand at the outset and the error would most likely have been resolved immediately.
22. Instead, the Council sent its demand to the property address that Mr X knew nothing about. Further, when it received no responses, it went on to issue a summons and obtain a liability order for a debt Mr X’s company did not owe.
23. It appears it did not send the summons to the registered address for Mr X’s company. To the best of the Council’s knowledge it sent the account to bailiffs without having acted upon the information it obtained from a Companies House check, so it seems evident that there had been no review of the file to ensure the council had acted correctly up to that point and to verify the debt was correctly owed before engaging bailiffs. This too would have avoided unnecessary bailiff contact.
24. The Council’s complaint handling was also poor. The Council did not provide correct information and its response indicates some confusion about what its correct procedures were.
25. The Council has now apologised and taken action to withdraw the summons and delete the business rates account that was wrongly set up. It has also taken action to address wrong information contained in its processes and procedures.
26. I do not consider there is a clear link between the fault by the Council and the issue Mr X told us about with his property transaction. So, I do not have grounds to seek any remedy for Mr X in respect of this. However, Mr X was undoubtedly put to the time and trouble of contacting the council to challenge a business rates liability that his company had no connection with. The Council also sent bailiffs to Mr X when the debt was not owed by him. This would have come out of the blue for Mr X and his family who knew nothing of any earlier bills and correspondence. So, I consider a payment is warranted in respect of the time and trouble Mr X was put to and for the distress from the sudden and inappropriate contact from bailiffs.

Agreed action

27. To recognise the time and trouble Mr X was put to in contacting the Council, pursuing his complaint and the distress caused by the sudden and inappropriate contact from bailiffs, the Council agreed to pay Mr X £500.
28. The payment should be provided to Mr X within four weeks of my final decision.

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Final decision

29. There was fault by the Council leading to injustice. I have now completed my investigation and closed my file.

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Investigator's decision on behalf of the Ombudsman