Summary: The Ombudsman will not investigate Mr X’s complaint. This is because there is insufficient evidence of fault in the Council not sending business rates bills and not awarding small business rates relief on a second property. If Mr X disputes the Council’s interpretation of the law, that is a matter for the courts.

The complaint

1. Mr X complains the Council: did not bill for business rates for three years on a property he rented and did not grant the property small business rates relief. Mr X says this resulted in an unexpected demand to pay over £2,000 that he does not believe he owed.

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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’. We provide a free service, but must use public money carefully. We may decide not to start or continue with an investigation if we believe it is unlikely we would find fault.
3. 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)

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How I considered this complaint

4. I considered the information Mr X provided and the relevant law. I shared my draft decision with Mr X and considered his comments on it.

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What I found

5. The Council uses licence agreements to rent out some business premises. Mr X’s business rented one property (‘Unit Y’) from the Council. The business received small business rates relief for Unit Y. From 2016 to 2020, the business also rented a second, smaller, property (‘Unit Z’) from the Council.

Council not billing until 2020

6. Mr X and the Council agree the licence agreement on Unit Z said the occupier (Mr X’s business) must tell the Council’s rating department about their occupancy. Neither the Council nor Mr X has any evidence the Council’s rating department was notified when Mr X’s business began renting Unit X. Mr X believes there would have been notification and he says the Council department that dealt with renting out the units was likely to have told the rating department. The Council states there is no evidence and anyway it was the responsibility of Mr X’s business, not of another Council department.
7. The business received no rates demands for over three years. When the business gave notice it was leaving Unit Z, the Council issued a backdated bill for over £2,000 business rates since 2016. The Council says this was because it was the first time its rating department knew the business had been there. Mr X says if he had received a rates demand at the outset, he would have asked for small business rates relief on Unit Z and if the Council had refused that, the business would not have rented Unit Z.
8. Mr X’s business chose to sign the licence agreement, which obliged it to notify the rating department it was occupying Unit Z. So I do not see fault if a different Council department did not tell the rating department.
9. Also, given the apparent lack of evidence of what happened in 2016, it seems unlikely any investigation by the Ombudsman would be likely to reach a clear enough view now about what happened several years ago.
10. For these reasons I shall not investigate this part of the complaint.
11. Responding to a draft of this decision, Mr X accepted my view but argued we should recommend the Council adopt a system of logging any notifications of changes of occupancy, ensuring it acted on such notifications, and issuing advisory notes to businesses. However, we can only make recommendations where we find fault causing injustice. That is not the case here.

Council not giving small business rates relief on the additional property

12. When he received the bill for Unit Z, Mr X suggested Unit Z qualified for small business rates relief. The Council said Unit X could not get relief because a ratepayer can only receive small business rates relief on one property at a time and Mr X’s business was already receiving it for Unit Y.
13. Mr X argues his business can receive small business rates relief on each property. He cited various legislation and guidance that he said, ‘specifically state additional units are eligible below an aggregate RV [rateable value] of £20000.’
14. I have considered the law on small business rates relief. When Mr X first rented Unit Z, the law was the Non-Domestic Rating (Small Business Rate Relief) (England) Order 2012. Soon after, that was replaced by the Non-Domestic Rating (Reliefs, Thresholds and Amendment) (England) Order 2017. Both Orders allow rates relief ‘Where the ratepayer occupies only one hereditament in England…’ A ‘hereditament’ is a property attracting business rates. Where a ratepayer occupies more than one property in England, both Orders allow some additional properties to be disregarded in certain circumstances.
15. On my ordinary reading of both Orders, the logical implication of specifying relief is for those with ‘…only one hereditament…’ and of disregarding some additional hereditaments is that where a business has more than one property, it might still be possible to get small business rates relief but only on one property at a time.
16. Responding to a draft of this decision, Mr X argued the legislation does not say small business rates relief is for ratepayers occupying only one hereditament. On my ordinary reading of the legislation, I disagree. The legislation states relief is available ‘Where the ratepayer occupies only one hereditament in England…’ On my reading, that does not mean relief is available on multiple properties.
17. I also took account of a House of Commons briefing paper on the subject. This states, ‘The relief is only available on the main property, not on any smaller properties that the business occupies.’
18. In response, Mr X suggested this document was irrelevant to his complaint as it was written recently, in 2020. I was already aware of that as the document is clearly dated 15 May 2020. I do not consider that affects its relevance as a guide to the subject. Mr X also cited favourably some parts of the briefing but dismissed the part of the briefing that I quoted above. I consider the relevant section of the briefing should be read as a whole. When that is done, I consider the briefing is clear that, while a business with more than one property might receive small business rates relief, the relief will only be on the business’ main property. So Mr X’s comments on this briefing do not persuade me to change my draft decision.
19. I also considered the documents Mr X cited. He cited identical text in explanatory notes to another statutory instrument and in a letter from the Ministry of Housing, Communities and Local Government to councils. Taken as a whole, I consider this text supports the view that small business rates relief can only be for one property, as the key provision refers to ‘…the sole or main property…’ and a rates reduction ‘…for this property…’ This text only refers to additional properties in the context of stating the limits on their rateable value for the sole or main property (not other properties) to remain eligible for small business rates relief.
20. Mr X also cited online government advice for businesses. This states that if a business uses more than one property, ‘You can still get small business rates relief on your main property…’ if the other properties’ rateable values are below certain limits. To me, this means small business rates relief is only available on the ‘main property,’ not more than one property.
21. Responding to a draft of this decision, Mr X disagreed with my views in the two preceding paragraphs. He argued the documents he cited left no room for interpretation. I have reconsidered those points, but I am not persuaded the information Mr X cited shows a business can simultaneously get small business rates relief on more than one property.
22. Mr X also said the Council’s website suggested small business rates relief was available on more than one property at a time. The Council denies its wording suggested that. Mr X points out the Council has since changed the wording. That does not necessarily mean the previous wording was wrong. In any event, the law, not the Council’s website, controls which properties can get small business rates relief. Also, as noted above, there is not enough evidence Mr X registered for business rates or sought to claim small business rates relief when he rented Unit Z in 2016. In that context, I consider it would be disproportionate to investigate further whatever the Council’s website might have said in 2016.
23. The evidence I have seen suggests a business can only get small business rates relief on one property in England at a time. So I shall not fault the Council for refusing relief on Unit Z.
24. My view here is based on my ordinary reading of the information I have mentioned. If Mr X disagrees with the Council’s interpretation of the law as applied to his business rates, that would ultimately be a matter for the courts, so the restriction in paragraph 3 would apply. Interpreting the law is more appropriately for the courts than for the Ombudsman. Mr X is concerned about the possible cost of court action. I acknowledge that concern, but it does not enable the Ombudsman to interpret the law where the law’s meaning is disputed.

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Final decision

25. The Ombudsman should not investigate this complaint. This is because there is insufficient evidence of fault regarding the billing and rates relief. If Mr X disputes the Council’s interpretation of the law, that is a matter for the courts to decide.

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Investigator's decision on behalf of the Ombudsman