Summary: Mrs X complained about the Council’s decision to refuse business rates relief and its complaint handling, causing financial loss and distress. We found no fault in the Council’s decision making but we found fault in its complaint handling. We recommended the Council provides an apology to Mrs X, pays her £100 for time and trouble and acts to prevent recurrence.

The complaint

1. Mrs X complains the Council wrongly charged her business rates and handled her complaint poorly.
2. Mrs X says she suffered financially and had to close her business. The stress affected her and worsened her late husband’s existing health conditions. And she has suffered upset and anger due to being forced to pay sums not owed.

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What I have and have not investigated

3. Mrs X contacted the Ombudsman in January 2023 so matters arising before January 2022 are out of time. However, I consider there is good reason to exercise discretion to investigate. This is because Mrs X was unaware the Council would not apply rates relief until she received bills in summer 2021. She was then in ongoing communication with the Council until December 2022 and the Council did not signpost to us earlier. I will therefore investigate from summer 2021.
4. I have not investigated Mrs X’s complaint that the Council should have known she took ownership of the business in 2020. This is out of time, there is not enough evidence of fault and further investigation would not lead to a different outcome. I say this because this was not a factor relevant to the Council’s decision to refuse rates relief.

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The Ombudsman’s role and powers

5. 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)
6. We consider whether there was fault in the way an organisation made its decision. If there was no fault in the decision making, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
7. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)
8. The law says we cannot normally investigate a complaint unless we are satisfied the council knows about the complaint and has had an opportunity to investigate and reply. However, we may decide to investigate if we consider it would be unreasonable to notify the council of the complaint and give it an opportunity to investigate and reply (Local Government Act 1974, section 26(5))
9. We provide a free service, but must use public money carefully. We do not start or may decide not to continue with an investigation if we decide:

• there is not enough evidence of fault to justify investigating, or
• further investigation would not lead to a different outcome. (Local Government Act 1974, section 24A(6))

10. If we are satisfied with an organisation’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

11. I spoke to Mrs X and I reviewed documents provided by Mrs X and the Council.
12. I gave Mrs X and the Council an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

Business rates

13. Business rates are charged on most non-domestic properties. A council will send a business rates bill each year based on the information it holds.
14. Councils will not usually be aware when a business changes ownership; it is up to business owners to provide the council with up to date information.
15. The Council’s website includes an online form for new occupiers to inform its business rates team.

Disputes about liability

16. The question of business rates liability is decided in the magistrates’ court, as a defence against the grant of a liability order, with appeal by way of case stated to the higher courts. These complaints are within our jurisdiction because the complainant is only ever the subject of the magistrates’ court proceedings; they cannot resort to court at their own instigation.
17. If the complainant has paid the debt to stop court action then they have accepted liability and deprived themselves the opportunity to argue their case at court. We will usually not investigate these cases as the court was better placed to make the decision.
18. However, a complainant cannot raise as a defence against a liability order that a council has failed to apply rates relief as it should have done. Therefore, where entitlement to rates relief is in dispute, the complainant may come to the Ombudsman.

Rates relief

19. In March 2020 the Government expanded the availability of retail rates relief. It published guidance making clear this only applied to occupied businesses.

Rateable occupation

20. Case law says the four conditions of rateable occupation are:
• actual occupational possession;
• exclusive occupation or possession;
• occupation or possession which is of some value or benefit to the occupier/possessor; and
• occupation or possession which has a sufficient quality of permanence.
21. It is for a council to decide whether a business is occupied for the purposes of rates relief. However, the Ombudsman can consider if a council has followed a proper decision making process.

The Valuation Office Agency (“VOA”)

22. The VOA decides if a property should be rated, the rateable value and the date each property enters and leaves the rating list.  If someone wants to challenge the VOA’s decision they have the right of appeal to the Valuation Tribunal.

Principles of good administrative practice

23. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in our jurisdiction: “Principles of Good Administrative Practice”. This includes:
• Having clear and accessible appeal routes
• Providing clear and timely information on how and when to appeal or complain

What happened

24. In June 2020 Mrs X set up a company to run a pub.
25. Mrs X says in July 2020 a member of staff moved into the living quarters at the pub. Mrs X says she then told the Council she had taken ownership of pub and a member of staff would be moving in.
26. In December 2020 Mrs X asked the Council about business grants and the Council replied, outlining the eligibility criteria.
27. The Council says it learned the business had changed ownership in May 2021 and so sent an occupation form to the address.
28. In June 2021 Mrs X returned an occupation form to the Council. In a cover letter she explained she had recently tried to apply for a business grant and then found her business was not registered for business rates. She said she was previously unaware to notify the Council of the change in occupier but now attached an occupation form. She explained she took over the business in June 2020 but could not start refurbishment until May 2021 due to COVID 19 restrictions. She now expected to complete works and open the business in July 2021.
29. In June the Council issued Mrs X bills charging business rates based on an empty property from June 2020 to March 2022. It also emailed to explained it could not consider Mrs X for any business grants or rates relief as she was not yet trading.
30. Mrs X disputed the bills as the business was due to open in July 2021 and so would not be empty from then. Further, she expected retails rates relief to apply prior to July 2021.
31. The Council replied that rates relief only applied to businesses actively trading. The Government did not support vacant premises or those under refurbishment.
32. In August a third party contacted the Council on Mrs X’s behalf. They said Mrs X expected the Council to apply rates relief from June 2020 to May 2021.
33. In September the Council sent Mrs X an amended bill holding her liable for business rates based on an empty property from June 2020 to July 2021.
34. On the same date the Council wrote to Mrs X explaining business rates liability started from June 2020, on the date of incorporation. Works to get the property ready for opening did not start until May 2021 and a recent news article reported the business opened on 27 July 2021. It rated the business as empty and vacant prior to that date, applying empty property charges. As the business was not open or trading she was not entitled to rates relief up to 27 July 2021. It had since applied occupied rates and awarded retail rates relief.
35. In October the third party repeated that rates relief should apply from June 2020 to May 2021.
36. In November the Council repeated the property was empty until July 2021 and so not entitled to retail rates relief prior to that date.
37. The third party contacted the Council again.
38. In December the Council said it understood property was vacant until July 2021 but if they could provide evidence of trading before then it would consider this.
39. The third party said Mrs X would have opened the business sooner if not for COVID 19 restrictions. Government guidance said businesses temporarily closed due to Government advice should be treated as occupied.
40. In January 2022 the Council replied. It explained the rule referred did not apply to the Mrs X as she was not trading from the property before any Government restrictions required them to close.
41. The third party disputed this and the Council suggested they raise a complaint.
42. In February the third party wrote to the Council again, this time under the heading “complaint”.
43. The Council responded in March. It noted Mrs X did not advise she had taken over the property until June 2021. It explained Mrs X was not trading from the property before COVID 19 restrictions and so was not forced to close. Therefore, the rule applying to businesses that temporarily closed did not apply. Evidence seen also showed Mrs X did not have equipment needed to trade at an earlier date, even without restrictions. The bills remained payable and this was its final decision. Her only other recourse was judicial review or a liability order hearing.
44. In April Mrs X sought a second opinion from the Council.
45. The Council responded further in April. It repeated she was not trading before restrictions came into place and so was not affected by the temporary closure due to restrictions. The property was vacant until July 2021. It was not occupied for the purposes of rates relief and this decision was in line with Government policy. It outlined the evidence relied on in reaching its view the property was not occupied. It confirmed her only further recourse was judicial review.
46. In May Mrs X contacted the Council again disputing the bills issued for 2020/21 and 2021/22. She said the Council knew the business had changed hands as it issued a Council tax bill in 2020 and exchanged correspondence with her in December 2020. She said the business was occupied as someone had moved in and started paying council tax in June 2020.
47. The Council replied in October. It said the pub itself was not occupied and so the charges stood.
48. In November Mrs X complained to the Council about its October response. In summary she said:
• It addressed her incorrectly.
• It did not explain the delay in response.
• It did not give a full response.
• The business shared the same access as the residence and so the building was occupied.
49. In December 2022 the Council replied. In summary:
• It apologised for addressing her incorrectly.
• It explained due to a technical issue her email of May 2022 was not added to her account resulting in its delayed reply.
• The VOA split the building into two separate assessments. Its Council Tax department dealt with the residential assessment and its business rates team dealt with the business rates assessment.
• In July 2020 Mrs X told the Council Tax team the residence was occupied. Any occupation of the residential part of the assessment had no bearing on the business rates account which was for the business part of the premises only.
• The VOA decided the entries on the rating list. Mrs X could contact the VOA if she was unhappy with the property being split in two.
• It could not amend the period 29 September 2020 to 26 July 2021 to “occupied” and therefore retail rates relief did not apply.
• Mrs X could seek judicial review or defend a liability order in court.
50. In January 2023 Mrs X contacted the Ombudsman.
51. In March the Council told the Ombudsman Mrs X had not completed its complaints process; it had dealt with the matter at a service level.
52. In May the Council sent Mrs X a complaint response. It said its decision remained the same. It apologised again for the delay in its October response and referred Mrs X to the Ombudsman.
53. In response to enquiries the Council said, in summary:
• In June 2021 it received an occupation form from Mrs X. It opened a business rates account for the pub effective from 29 June 2020 based on the information she provided.
• Mrs X reported renovations were taking place and the business was not open for trading so it applied the charges for an empty property.
• As the premises was undergoing refurbishment in readiness for occupation there was no “actual occupation” for business rates purposes.
• It heard on the news the pub was open for business from 27 July 2021 and it applied occupied rates from that date and retail rates relief.

Findings

54. Mrs X could not raise rates relief as a defence to a liability order and so it remains open for me to consider her complaint.
55. I am satisfied the Council has already had reasonable opportunity to investigate and reply to Mrs X’s complaint; it is not premature. It was up to the Council whether to follow its complaints process or to reply at service level; in any event it provided a final response.
56. It was up to the Council to decide if Mrs X occupied the business and so benefited from rates relief. Documents show the Council consistently explained to Mrs X it did not consider the business to be “occupied” while it was empty. It also explained it did not consider the business was temporarily closed, given Mrs X had never been able to open before July 2021. The Council considered the information Mrs X provided and decided in line with the law and Government guidance. I find no fault in its decision making process.
57. I acknowledge Mrs X disagrees with the Council’s decision but I cannot question the merits of a decision properly made.
58. Communications between Mrs X and the Council were ongoing for a long period. However, I find no undue delay in the Council’s responses except from May 2022 to October 2022. This is fault. Mrs X was put to avoidable time and trouble in the complaints process. This is injustice. I note the Council has already apologised for this and explained the delay.
59. I acknowledge the Council decided to address Mrs X’s dispute at a service level however in its final response it should still have signposted to the Ombudsman. The lack of referral is fault. Mrs X spent more time complaining to the Council instead of coming to us sooner. This is injustice.

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Agreed action

60. To remedy the injustice set out above the Council should carry out the following actions:
61. Within one month:
• Provide Mrs X with an apology for not referring to the Ombudsman sooner;
• Pay Mrs X £100 for time and trouble; and
62. Within three months:
• Amend its processes as needed to ensure the Council signposts to the Ombudsman as appropriate upon any final response (i.e. whether given under the complaint process or at service level).
63. The Council should provide us with evidence it has complied with the above actions.
64. The Council has accepted my recommendations.

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Final decision

65. I find the Council at fault in its communications with Mrs X. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman