Summary: Mr X complains the Council held him liable for business rates while it was considering a planning decision on his commercial property. He says the delays in the planning process caused him financial loss and a loss of income. He also complains about delays in the Council’s complaints handling. The Ombudsman finds no fault in how the Council applied business rates charges, but fault in how it handled Mr X’s complaint. The Council has agreed a remedy to address the injustice caused to Mr X.

The complaint

1. Mr X complains the Council held him liable for business rates while it was considering a planning decision on his commercial property. Mr X says the Council delayed making its decision but continued to charge business rates for the period of delay. Mr X also complains about delays in the Council’s complaints handling.
2. Mr X says the Council’s actions have caused him financial loss and a loss of income.

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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. We cannot investigate a complaint about the start of court action or what happened in court. (Local Government Act 1974, Schedule 5/5A, paragraph 1/3, as amended)
5. 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

6. I considered Mr X’s complaint and the information he has provided.
7. I have made enquiries to the Council and considered the information provided by it.
8. Mr X and the Council have had the opportunity to provide their comments on a draft of this decision. I have considered their comments before making a final decision.

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What I found

Background

9. 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.
10. 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.
11. The question of liability is decided in the magistrates’ court, as a defence against the grant of a liability order. Once the existence of a debt has been decided by the court, this is not a matter the Ombudsman can investigate for the reason set out at paragraph four above.

The Council’s complaints policy

12. The Council’s complaints policy says complaints will be passed to the relevant department, who will investigate and respond to the complainant within 20 working days.
13. The policy says a stage two response will be provided within 20 working days from the date of escalation.

What happened

14. Mr and Mrs X own a commercial property. They rented the property to a business, but in February 2018 the business closed and vacated the premises.
15. In June 2018, Mrs X told the Council their tenant had surrendered their lease and moved out. The Council applied an empty property business rates exemption for three months from the date the tenants vacated.
16. In August 2018, Mr X told the Council he was unable to pay the business rates because he was not receiving an income from the property. He told the Council he intended to sell the property and asked if he could pay the account once the property had been sold.
17. The Council told Mr X it could seek a liability order and it may then be able to allow some time for Mr X to pay upon completion of the sale of the property.
18. In October 2018, Mr X told the Council he had prospective new tenants who hoped to occupy the property from January 2019. The tenants required planning permission to change the use of the premises before they could move in.
19. A few days later, the Council issued Mr X with a summons warning letter due to unpaid business rates.
20. On 13 November 2018, the Council told Mr X it would suspend recovery action until January 2019. It said recovery action would continue after this date even if the new tenants had not taken occupation of the property.
21. On 26 November 2018, the Council received a planning application from Mr X’s prospective tenants.
22. In January 2019, Mr X asked the Council to extend the period of suspended recovery because his tenants had not moved in. He said they were still waiting for a planning decision. The Council told Mr X it could not extend the period of suspension and said it would need to secure a liability order.
23. In February 2019, the Council obtained a liability order for the unpaid business rates. Mr X subsequently agreed a payment plan with the Council.
24. On 11 March 2019, Mr X complained to the Council. He said the delays in considering the tenants’ planning application meant he remained liable for business rates for a prolonged period. He also complained he had lost rental income from his tenants because they were unable to occupy the premises until planning permission was granted.
25. On 25 March 2019, the Council granted planning permission to the new tenants to change the use of the premises.
26. The tenants signed the lease on the property on 31 May 2019.
27. In June 2019, the Council wrote to Mr X and asked if he still wanted a response to his complaint, given that the planning decision had been made. Mr X told the Council he wanted a response.
28. In August 2019, Mr X contacted the Council to say he had not received a response to his complaint. The Council apologised for the delay and told Mr X its response had been prepared but required a manager’s approval.
29. The Council provided its stage one response on 10 September 2019. It apologised for the delay in considering the planning application and for the delay in responding to Mr X’s complaint.
30. Mr X escalated his complaint to stage two on 12 September 2019.
31. The Council responded on 15 October 2019. It acknowledged the time taken in both matters was not acceptable.
32. Mr X remained unhappy with the Council’s response and brought his complaint to the Ombudsman.

Analysis

33. I am satisfied there is no evidence of fault in how the Council applied business rates charges. Whilst there is evidence of delay in the planning decision, Mr X is not the applicant.
34. As previously stated, the question of liability is decided in the magistrates’ court as a defence against the grant of a liability order. The Ombudsman cannot investigate a complaint about the start of court action or what happened in court, including the issuance of a liability order.
35. However, Mr X’s complaint is not a dispute about his liability for business rates. He complains the delays in the planning process meant his tenant was delayed in taking occupation of the premises, resulting in a financial loss to him.
36. I acknowledge Mr X says he had an agreement with his prospective tenant that they would pay business rates from the time the planning permission was granted. However, this is an agreement between Mr X and his tenant. Tenants are not required to pay business rates until they occupy the premises.
37. The Council acknowledges there were delays in considering the planning application. Because Mr X was not the applicant, the alleged injustice to him is the continued liability for business rates during this period of delay, and the alleged loss of rental income.
38. The Council has provided conflicting information about the date the tenants moved into the property (1 April 2019 and 31 May 2019). However, it has provided a copy of its diary notes, and an entry dated 20 May 2019 states the tenants were due to sign the lease from 31 May 2019. This is a contemporaneous record and therefore I am satisfied it is more likely than not that this date is correct.
39. I am satisfied the alleged injustice of financial loss cannot be directly attributed to the planning delays. The planning decision was issued on 25 March 2019, but the tenants did not sign the lease until 31 May 2019.
40. The date on which the tenants were able to move in was dependent on their circumstances, and not just the planning decision. The evidence shows the tenants did not sign the lease until two months after permission was granted.
41. Mr X says his tenants had to serve notice on their premises before moving into his property. He says there was then a “grey area while decorating was done”, and that he granted his tenants some “goodwill time” so this could be completed. Mr X says that although there was a gap of a couple of months, the matter was “never going to be an overnight process”. Mr X says if the Council had granted planning permission by the end of February 2019, his tenants may have been able to move in at the end of April 2019.
42. I acknowledge Mr X’s comments, but consider it is speculative to say the tenants may have been able to move in earlier but for the delay in the planning process. Mr X acknowledges there was a “grey area” regarding the time taken to decorate the property, and that he granted some “goodwill time” to the tenants. I cannot therefore hold the Council solely responsible for the delay in the tenants taking occupation of the premises.
43. Mr X’s comments relate to the delays in the planning process rather than the Council’s decision to hold him liable for business rates during this period. However, as previously stated, Mr X was not the planning applicant.
44. Mr X took the lease back from 19 February 2018, and the Council correctly applied a three-month empty property exemption until 18 May 2018. After this date, Mr X was required to pay business rates until the new tenants moved in. There is no evidence of fault in how the Council applied the business rates charges.

Fault in the complaints handling process

45. There is evidence of fault in the way the Council handled Mr X’s complaint. Its policy says complaints will be passed to the relevant department, who will investigate and respond to the complainant within 20 working days. The policy says a stage two response will be provided within 20 working days from the date of escalation.
46. The evidence shows the Council took 126 working days to provide a stage one response, and 23 working days from the date of escalation to provide a stage two response.
47. The Council acknowledges it should have provided its responses more quickly. It says it has apologised to Mr X for the delay and has offered to do so again. It is positive the Council acknowledges fault in this matter and is willing to provide a further apology to Mr X.

Agreed action

48. To address the fault identified, the Council has agreed to take the following action:

• Within two weeks of the final decision, provide an apology to Mr X, and
• Within two weeks of the final decision, remind staff to adhere to the Council’s complaints policy, specifically regarding timescales for providing a complaint response.

49. The Council is required to provide the Ombudsman with evidence it has taken the agreed action.

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Final decision

50. I have completed my investigation of this complaint. The Council has agreed to remedy the injustice identified.

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Investigator's decision on behalf of the Ombudsman