The Ombudsman's final decision:
Summary: Mr X complained about the Council’s decision to revoke his company’s small business rate relief. The Ombudsman found the Council was at fault and it agreed to provide a remedy.
- Mr X complained about the Council’s decision to revoke his company’s small business rate relief, resulting in a bill for over £10,000. He said the decision was wrong and caused his company financial difficulty.
- Mr X wanted the small business rate relief reinstated and compensation.
The Ombudsman’s role and powers
- 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)
- 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)
How I considered this complaint
- As part of the investigation, I have considered the following:
- The complaint and the documents provided by the complainant.
- Documents provided by the Council and its comments in response to my enquiries.
What I found
- Business rates are calculated based on the rateable value of the property a business occupies.
- A business can get small business rate relief if their property’s rateable value is less than £15,000 and it only uses one property.
- It may still be possible to get relief if a business uses more than one property, as long as the total rateable value of all its properties is not more than £19,999.
- Mr X is a director at company A. Before the events complained about, Company A received small business rates relief (SBRR) from the Council.
- In September 2019, the Council reviewed company A’s right to SBRR. It located two other companies with the same name as company A, working from different premises in other areas of the country under the control of different local authorities (LAs). I have referred to these as LA one and LA two.
- The Council emailed LA one and two on 20 September 2019. It said checks suggested it was giving SBRR to a company also liable for business rates in their area. It asked LA one and two to complete and return a form which provided the name of company A and the addresses it was thought to be working from.
- LA one replied on 7 October 2019. It confirmed a company with the same name as company A was liable for business rates in its area, but the company was not receiving SBRR because its rateable value was too high.
- LA two replied on 11 October 2019. It completed the form to confirm a company with the same name as company A was working from an address in its area. It said the company was not receiving SBRR because its rateable value was too high.
- The Council wrote to company A on 14 October 2019. It said a review found the company also occupied premises in other areas and SBRR was therefore removed. It attached a demand for payment of business rates totalling more than £10,000.
- An officer from company A, officer Y, emailed the Council on 21 October 2019 to challenge its decision. They said company A did not occupy the other premises. Officer Y had done their own search for one of the extra addresses and found a company with a different name. They could not search for the other address as the Council had not given full information. Officer Y asked the Council to provide evidence of how it made its decision.
- The Council answered the email from company A and said it would make enquiries. It placed company A’s account on hold in the meantime.
- The Council then emailed LA one and two. It said company A denied having premises in their areas. It gave the registered number and address for company A and asked LA one and two to confirm they were billing the same company.
- LA two emailed back on 22 October 2019. It said the company it was billing was not company A.
- Officer Y sent a further email to the Council on 25 October asking what evidence it had.
- The Council said it could not provide an update until it had more information from LA one and two. It said LAs one and two both told the Council company A was liable for business rates in their areas. As company A said this was wrong, the Council was checking with LA one and two.
- Company A sent another email to the Council expressing their dissatisfaction and asking to make a complaint.
- The Council emailed LA two again on 25 October 2019. It asked LA two to confirm the name and company number of the company it was billing. It said the information it first gave led the Council to adjust SBRR in its area.
- LA two confirmed the company it was billing had a slightly different name and a different registered number.
- The Council asked LA two to update the name of the company it was billing on its records.
- The Council sent a chaser email to LA one on 5 November 2019.
- The Council provided a complaint response to company A on 8 November 2019. It confirmed it carried out a review of SBRR in September. It said it checks the company name to ensure it is not occupying other premises. It found details of two other properties matched to company A’s name. It contacted the relevant LAs, who confirmed company A occupied premises in their area. It therefore ended company A’s SBRR. The Council confirmed, further to company A’s challenge, it contacted LAs one and two again. LA two confirmed it was billing a company with a different registered name. LA one did not respond, and the Council said no further action would be taken until a response was received from them.
- Mr X emailed the Council on 5 December 2019 asking for the complaint to be considered at stage two of the process.
- The Council emailed LA one again on 3 January 2020 asking for details of the company it was billing.
- Mr X brought his complaint to the Ombudsman on 3 February 2020. He said the Council made a mistake when it revoked his company’s SBRR. As a result, he said investors had asked for some of their money back, causing financial difficulty. He wanted the SBRR to be reinstated and compensation.
- Mr X then emailed the Council to confirm he complained to the Ombudsman because the Council failed to provide a stage two response.
- The Council confirmed to the Ombudsman it had not yet completed its stage two complaint response. The Ombudsman therefore told Mr X to wait for the Council’s response.
- The Council emailed Mr X on 27 February 2020. It said it still had no response from LA one, so it decided to reinstate company A’s SBRR.
- The Council sent its stage two response to Mr X on 25 March 2020. It confirmed it had to investigate after identifying two companies with the same name in different areas. It said the company in LA one’s area was already in receipt of SBRR and it is an offence for a company to get the relief twice. It said it was not able to substantiate the second company so agreed to re-instate his SBRR.
Response to my enquiries
- The Council told me it uses a managed product to cross reference data across the country. This produces details of matching companies receiving SBRR who may have more than one business.
- Details of the company trading name were checked with LAs one and two. Both confirmed they had company A trading at different addresses.
- Because of the information from the Council’s managed product, and the information from the other two LAs, the Council decided to remove company A’s rate relief.
- LA two later confirmed their trading name for company A was not as detailed on companies house and they needed to correct their records. The Council sent follow up emails to LA one but got no response.
- The Council did not carry out any company checks but recognises it may be worthwhile to incorporate them into future procedures.
- The Council said it did not offer Mr X compensation because it believes its decision, based on the evidence it gathered, was correct and that it was another LA’s records that were wrong. It said unfortunately there were delays getting information from other LAs. It said it will review its processes on the removal and granting of SBRR going forwards.
- At first, both LAs one and two confirmed they were also billing a company with the same name as company A. However, they were just confirming the limited details the Council provided. There was no confirmation or proof the companies were the same.
- I have seen a copy of the data request form the Council sent to LA one and two. The form confirms the name of company A and the addresses it was thought to be working from. However, the form does not include any details about the company (such as registered number, registered address, or business type). The form simply provides the details found by the Council’s software programme. Without asking for specific company details, the Council’s request was flawed. That was fault.
- When company A challenged the Council’s decision, it did provide LAs one and two with specific company details. LA two was quickly able to confirm it was not billing company A. Unfortunately, LA one did not respond.
- Eventually, the Council agreed to reinstate company A’s SBRR because LA one did not provide further confirmation. This took about four months and was too long. That was fault. The Council should have done its own investigations in the meantime or reinstated SBRR sooner.
- As part of my investigation, I looked into the details of the company working in LA one’s area with the same name as company A. The evidence I found suggests the companies are not the same. I found this information through Internet searches and without having to contact LA one.
- Mr X is unhappy the Council decided to remove SBRR without first giving company A the chance to respond to its findings. While I understand his view, I would not criticise the Council for that approach, providing it had taken necessary steps before making in its decision. I do not consider that is the case. The Council could and should have done more.
- The Council’s decision to revoke SBRR from company A was wrong. It has recognised and corrected this. While the Council stands by its original decision, based on the evidence it gathered, I consider the process was flawed due to a lack of proper validation.
- The Council’s confirmation that it will review its processes and consider using company searches in future is welcome.
Did the fault cause injustice?
- I have considered whether Mr X suffered an injustice because of the Council’s failings.
- I have seen no evidence Mr X or company A suffered a quantifiable financial loss because of the Council’s decision, so I cannot recommend compensation or repayment.
- However, I consider the flawed decision and delays did cause Mr X avoidable distress and uncertainty. That is his injustice, and the Council should offer a remedy.
- Within four weeks of my decision, the Council agreed to apologise and pay Mr X the sum of £300 to recognise the avoidable distress and uncertainty the delays caused.
- I have completed my investigation. I found there was fault in the Council’s decision to revoke small business rates relief from Mr X’s company. It agreed to offer a remedy.
Investigator's decision on behalf of the Ombudsman