Summary: The Ombudsman will not investigate this complaint against the Council about enforcement action for non-payment of business rates. This is because he is unlikely to find fault with the actions taken by the Council in securing payment.

The complaint

1. The complainant, which I refer to as Company X, is making a complaint about the way the Council handled its liability to pay business rates. Company X says:

• It was incorrectly charged business rates by the Council.
• It did not receive legal documentation in time or at all, including a payment demand, reminder or a court summons.
• It was treated unfairly by the Council by passing outstanding business rates to an enforcement agency to recover the arrears which led to a £3,000 enforcement fee and £75 compliance fee.

2. Company X wants the enforcement and compliance fees refunded.

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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’. 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. (Local Government Act 1974, section 24A(6), as amended).

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How I considered this complaint

4. I have reviewed Company X’s complaint to the Ombudsman and Council. I have also had regard to responses of the Council and relevant legislation and case law. I now invite Company X to comment on a draft of my decision.

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What I found

Background

5. Business rates are a tax on property used for business purposes and is calculated with regard to the rateable value of the property. The Valuation Office Agency (VOA), which is part of central Government, decides if a property should be rated, the rateable value and the date each property enters and leave the rateable list. Billing and recovery of business rates is taken by local authorities. If, however a business wants to challenge the VOA’s decisions it has the right of appeal to the Valuation Tribunal.

Chronology of events

6. In August 2019, the Council issued Company X a business rates demand to its correspondence address in New Zealand. The demand set out an instalment plan for the amount commencing in early September 2019. However, because Company X did not pay, the Council issued a demand reminder to the same correspondence address, yet payment was again missed.
7. In September 2019, legal proceedings were commenced following the issuing of a court summons in respect of the unpaid demand.
8. In early October 2019 (six weeks after the initial demand), Company X contacted the Council and queried the demand’s accuracy on the grounds of square footage which is used to calculate the amount payable. The Council replied giving notice of a scheduled court hearing on the matter. It also advised that any dispute as regards to the rateable value must be taken up with the VOA since it only acted to collect the amount. Later in the month, a hearing at the magistrates’ court was held following the court summons which resulted in a liability order being issued against the Company.
9. In November 2019, the Company received a visit from a bailiff in respect of the unpaid business rates. The Company says it was forced to pay a lump sum of approximately £45,000 (inclusive of a compliance and enforcement fee) to prevent any disruption to the business.

Assessment

(i) Business rates

10. The role of the Council with respect to business rates is to arrange collection and, where necessary take enforcement action. By law, the Council must bill Company X in accordance with the rateable value shown in the rating list and it does not act as a right of appeal against it. Any dispute as regards to the rateable value rests with the VOA. For this reason, I cannot determine any fault by the Council insofar as billing Company X in accordance with the VOA valuation.

(ii) Service of statutory document

11. I recognise that Company X states it did not receive statutory documents and only became aware of the bill by the time a court summons had been issued. However, the courts have said that any claim that a demand was issued late and so is invalid should be tested in the courts, not decided by the Ombudsman. On this basis, the proper course of challenge in relation to allegedly late documents would have been through the magistrates’ court prior to liability orders being granted. This said, Company X would have also had a right of appeal against the liability orders to the High Court, but this needed to be within 21 days of the liability order being granted. In these circumstances, it is not the role of the Ombudsman to make a determination on service of documents and in my view, it would have been reasonable for Company X to have used its right of appeal. Further, I recognise Company X says that it could not have appealed if it did not receive a court summons, but it was given notice by the Council of the legal proceedings in early October before the hearing. On this basis, I think it reasonable that Company X should have acted on this information and sought legal advice if it was unaware of its legal position.

(iii) Events leading to enforcement action

12. I note Company X feels it was treated unfairly due to the initial demand and court summons being only six weeks apart. However, this length of time is in compliance with the law and I would recommend Company X opt to have its correspondence address within the United Kingdom as opposed to New Zealand.
13. With respect to enforcement action being commenced against Company X during a process it was querying the rateable value, the Council did inform that it could not assist in this regard since this is the role of the VOA. In my view, Company X elected not to pay the demand since it was in disagreement about the rateable value of its property. As Company X has been previously informed, it is unlawful to withhold payment of business rates for reasons of disagreeing with the rateable value. There is a prescribed process for Company X to follow in these circumstances (that is a right of appeal). Since payment was not made, I am unlikely to find fault with the actions of the Council in referring the matter to an enforcement agency.

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Final decision

14. I will not investigate this complaint. This is because I am unlikely to find fault with the actions taken by the Council in securing payment of business rates.

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Investigator's decision on behalf of the Ombudsman