Summary: There was no fault in the how the Council decided Mr X’s council tax and business rates liabilities. It billed him in line with the information it had from the Valuation Office Agency. Nor was there any fault in how it decided Mr X was not eligible for small business rate relief. The Council properly considered information it had available to it. There was fault in delaying a payment and not accounting for another payment Mr X was due. There was also fault in the delay in reviewing Mr X’s small business rates relief and these faults caused Mr X an injustice. The Council have already apologised and has agreed to carry out my recommendations to fully recognise Mr X’s injustice.

The complaint

1. Mr X complained the Council was at fault because it repeatedly mismanaged his council tax and business rates liabilities and wrongly decided he was not eligible for small business rate relief (SBRR).
2. Further, Mr X said where the Council was due to credit him money, it unnecessarily delayed these payments.
3. Finally, Mr X said the Council did not respond to his complaints in good time when he made them. He said the Council’s actions meant he incurred unnecessary expense, and it caused him distress because he was constantly following up on what the Council was doing.

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The Ombudsman’s role and powers

4. 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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
5. We consider whether there was fault in the way an organisation made its decision. If there was no fault in how the organisation made its decision, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
6. 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

7. I wrote to Mr X and considered the information he sent me.
8. I considered the documents the Council provided me.
9. I considered relevant law and guidance.
10. Mr X and the Council had an opportunity to comment on my draft decision.

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What I found

What should have happened

Council tax – banding and appeal rights

11. Every domestic property has a council tax band. The Valuation Office Agency, which is part of central government, decides this. Therefore, we cannot investigate that decision. If someone wants to change their property’s council tax band they can apply to the Valuation Office Agency and, if this refused, they can appeal to the Valuation Tribunal.

Council tax - recovery summary

12. The Council Tax (Administration and Enforcement) Regulations 1992 cover both the way councils collect payments of council tax and the way councils can recover council tax debt. The Tribunals, Courts and Enforcement Act 2007 and associated regulations cover the way enforcement agents may recover debts.

Business rates

13. The Non-Domestic Rates (Collection and Enforcement) (Local Lists) Regulations 1989 cover both the way councils collect payments of business rates and the way councils can recover such debt. The Tribunals, Courts and Enforcement Act 2007 and associated regulations cover the way enforcement agents may recover debts
14. 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.
15. 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.

Business rates - small business rate relief

16. Small business rate relief (SBRR) is awarded if a business has one property and its rateable value is less than £15,000. If the business has more than one property it can still get SBRR on the main property if none of the other properties has a rateable value above £2,899 and the total rateable value of all the properties is less than £20,000 (£28,000 in London).
17. The Council’s website provides information about SBRR. It also highlights where a property as a rateable value between £12,001 to £15,000 the rate of relief will go down gradually from 100% to 0%.
18. 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.
19. 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.

The Valuation Office Agency

20. The VOA decides the rating for a property, 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.

21. In 2018, we published guidance for Council’s dealing with complaints. In that guidance we emphasised (among other things) the following:
• stating the criteria for decision making and giving reasons for decisions;
• explaining and responding to any delays proactively;
• being service user focused by responding flexibly.

What happened

Council Tax liability-Property A

22. Mr X’s council tax liabilities complaint relates, to the Council’s decisions about a property he owned (Property A). Mr X told me Property A was previously a business unit and a residential unit and he modified it to three business units. Mr X also said he applied to the Valuation Office Agency (VOA) for a change of use of the property from domestic to non-domestic.
23. In 2021, the Council emailed Mr X about an outstanding council tax liability for Property A. The email said it was aware Mr X had applied to the VOA for a change of use, but until the VOA had updated the rating list, it remained an outstanding liability. Mr X responded saying he had previously told the Council Property A was no longer in residential use.
24. October 2021 onwards- In October, the Council sent Mr X a reminder notice for outstanding council tax for Property A of £1,718.20. Mr X responded again and complained to the Council, saying its liability notice was defamatory.
25. Mr X reiterated that he had told the Council Property A was no longer in residential use. He also said he had written confirmation from the VOA about this decision, which was effective from January 2020.
26. In early November, a Council officer called Mr X to discuss the outstanding bill. They followed this up with an email two days later which said;
• the VOA had not notified the Council about the change of use;
• the VOA website was still showing Mr X’s application as ‘live’, and Property A remained listed at band A;
• the Council could not alter Mr X’s Council tax account until the VOA notified the Council of any change.
27. In the email, the Council advised Mr X to contact the VOA and said it had suspended any recovery action for three months to allow for this to happen.
28. Immediately following this email, Mr X responded sending the Council copies of two emails he had sent to the VOA, both on the day of the Council telephone contact and on the day of the Council email. In both VOA emails Mr X sent, he complained to the VOA about their inaction, because he said it had not fully completed the process about the listing of Property A.
29. Around this time, in a response to the Council, Mr X referenced the two VOA emails and said he expected the Council officer dealing with his case to follow this up directly with the VOA.
30. In early December, the VOA sent a notification to the Council, that Property A was no longer in residential use and the ‘effective date’ was late January 2020. The Council updated its records in late December.
31. The following day, the Council sent Mr X an amended bill and asked him for bank details to return the council tax credit he was due of £1,545.45. The Council credited this to Mr X’s account by late January 2022.
32. In mid-May 2022, the VOA sent the Council another notification about Property A. This notification amended the relevant ‘effective date’ to the start of January 2020. The Council amended its records in late May and credited Mr X’s account with the remaining amount he was due (£154.36).
33. The Council did not fully process this final outstanding amount and provide Mr X with a refund, until after he made a complaint in August (2022). The Council told me it sent this refund to Mr X’s bank account around two weeks after that.
34. Complaint about Council Tax billing- Mr X complained to the Council in mid-August 2022. He said the Council had mismanaged his Council Tax billing and he felt ‘hounded’ by the recovery action the Council started. He said because he had supplied information to the Council saying the VOA had decided to alter the rating, it should not have started recovery action. Mr X also highlighted the delayed payment he was due.
35. Furthermore, he said he was unhappy that having told the Council he had suffered with an illness affecting his vocal cords and had asked for contact in writing, the Council had called him on the telephone.
36. In its stage one reply, the Council apologised for the delay in making the additional payment due to Mr X in May. It also gave him the sequence of events which impacted on his Council Tax billing and explained why it had billed him based upon the information it had at the time.
37. In late August, Mr X escalated his complaint and followed this up in early September. In early October, the Council responded and said the explanation it had given Mr X about the handling of his Council Tax billing was sufficient. It also apologised for the delayed refund of money he was due.
38. The Council said it was aware Mr X had asked the Council not to call him but explained it had done this with ‘good intentions’. The Council also accepted it could have provided the response in writing.

Business rate liability

39. Background - Mr X told me he is the managing director of two companies, Company J and Company K. He also said another company, Company L, became part of Company J at some point in the past.
40. Mr X also said Company J’s registered office is Property A. In addition, Mr X told me he previously held licences to occupy three offices (rooms 14, 15 and 16) at another managed property, Property B.
41. Mr X said Company J had previously occupied two of the rooms at different times at Property B (rooms 15 and 16). He also said room 15 was previously subdivided into two.
42. Pre-October 2021- The Council sent me information which shows a managing agent from Property B sent the Council an email, telling them that Company J was occupying rooms 14 and 15 at Property B from January 2020 onwards.
43. The email told the Council to set up the tenants account alongside a c/o address at Property B but in the name of a fourth company (Company M).
44. The Council told me the agent sent an update in September 2021, that Company J had vacated these rooms in June 2021. They also told the Council that Company K had moved into Property B (room 15) from September 2021 onwards.
45. December 2021-May 2022- In early December 2021, the VOA sent the Council an amended rateable value notification for Property A. This increased its rateable value from £13,500 to £16,500 and it took effect from late January 2020. This meant it no longer qualified for small business rates relief.
46. The Council therefore sent Mr X three amended non-domestic rating (NDR) bills for Property A, for the years 2019 through to 2022. The 2019-2020 bill, has a credit added for SBRR up until the date of the change in rateable value of Property A.
47. In early and late December, Mr X sent two emails to the Council, the first disputing the liability for the bill. The second email reiterated this request and asked for revised bills for Property A. Mr X said the bills should name three separate companies, namely Company J and K and a further Company (N), who were all occupying separate parts of Property A.
48. Mr X also said he was challenging how the VOA calculated the rateable value of Property A.
49. In March, the Council sent Mr X a further NDR bill for the year 2022 -2023. It registered the bill against Company J only. Mr X responded again by saying the Council should register the bills against three separate companies.
50. May 2022 onwards- In early May, the VOA sent the Council another notification about listings at Property A. The notification now said;
• new entry – ‘the front first floor’, rateable value of £4700, effective from the start of January 2020;
• existing ‘property A’ – new rateable value of £13,500, effective from 2017.
51. The day after this notification, the Council sent two sets of NDR bills to Mr X at Property A. The Council marked the first bill as a new liability, and the second as rateable value reduction, in line with the VOA notifications above.
52. In mid-May, Mr X contacted the VOA querying a fault in the rating listings. The VOA responded, apologising for a delay in splitting Property A into three units, in line with Mr X’s challenge.
53. In mid-May, the VOA sent a further notification relating to Property A. This told the Council that Property A was now split into three separate units, identified as follows;
• front first floor- rateable value alteration from £4700 to £4950, effective from the start of January 2020;
• rear first floor-rateable value £4,700 (effective from 2017);
• ground floor-rateable value £10,000 (effective from 2017).
54. Mr X then wrote to the Council and queried why the three separate occupiers had not had their respective bills. He also asked for repayment of business rates that the Council had overcharged, in light of recent VOA decisions.
55. The Council issued three new bills to the occupiers of Property A, in line with the VOA rateable values and to the occupants Mr X had requested. In June, it also wrote back to Mr X and explained it had credited his account and said once it had considered any application for SBRR, it would then issue a refund.

SBRR application and award

56. June 2022- In late June, Mr X sent three applications for SBRR for each of the three units at Property A. The application form asks the person completing to identify any other properties where they have a non-domestic rate liability for.
57. The form(s) has a guidance note which sets out the rateable value criteria where such a property would be disregarded in line with the guidance (see paragraph 17). In the forms relevant to Company J and K, Mr X said there were no other properties to declare, taking account of the relevant criteria.
58. After the Council asked Mr X for clarification about this point, he responded saying his only other liability consideration for Company J, was one room at Property B. Following this, the Council wrote to Mr X and explained it had a registered account for two rooms at Property B, and that Company J was liable for the business rates. It said the rateable value of one of these rooms meant it could not apply SBRR for the entire period he was claiming.
59. The Council then said it credited Mr X’s account with a refund of £14,439.48, comprising the newly calculated bills for Company J from 2017-2023. Mr X said he would clarify what information the management company had given the Council to inform this decision. He also highlighted a separate issue, that the Council had not taken account of a payment of £400 he had already made to it in April 2022.
60. July 2022- Mr X wrote to the Council in late July. He said he disputed the Council’s decision not to award SBRR for Company J and gave the Council his reasons. He also asked for an update on two matters, specifically;
• the rectification of the bill after the payment he made in April;
• an update on the remaining SBRR applications.
61. Complaint about Business rate liability- in mid-August, Mr X submitted a formal complaint to the Council saying it had not;
• paid his refund due in June for the April payment;
• processed his SBRR applications;
• miscalculated business rate liability.
62. In late August, in its stage one reply, the Council apologised for what it said was a delay in replying to his earlier contact in July. It said the delay was because the matter required detailed investigation. This response explained it had reduced the earlier credit due, now reduced to £11,641.18 (from £14,439.48).
63. The complaint reply, which a business rates manager sent, also told Mr X:
• why it did not consider Company J was entitled to SBRR in their view;
• because Company K shared a website with Company J, it was jointly liable, and excluded from getting SBRR for a set period because of occupation at Property B;
• it had credited Mr X with the £400 from April 2022.
64. The Council apologised to Mr X for the delay in processing his refund and offered a point of contact for any additional clarification. Mr X escalated his complaint, saying the Council had used misleading information for its decisions. Mr X told the Council he would only deal with this matter through the complaint procedures.
65. In a letter Mr X sent to the Council as part of his complaint correspondence, he highlighted why he believed the Council was wrong to rely on the information it did. He said another company he owned (Company L), had been in occupation in one of the rooms at Property B.
66. In October, the Council sent a final response to Mr X. It reiterated its earlier apology for delays in providing refunds and said because the department was also responsible for managing Covid-19 relief funds and energy rebates, this had impacted on its capacity.
67. The Council’s response said it could find no fault with the council officer’s reasoning for their decision that Company J and K had a joint liability. The reply also said there was still an unresolved aspect about the occupation of rooms at Property B and the Council offered to review its decision once it had this clarification.
68. Review of Mr X’s liabilities- Mr X provided further information to the Council about his businesses and premises occupation. In November, the Council followed this up with several queries. The Council told Mr X it may need to issue further bills, because it said Mr X had provided information about other liabilities.
69. Later in November, Mr X updated the Council on his position and acknowledged some aspects of the information he previously gave the Council was inaccurate. He also said information the managing agent had provided was not representative of his occupation of Property B.
70. In late April 2023, because he had heard nothing further from the Council, Mr X escalated his complaint to us. In early June, the Council sent Mr X an updated schedule on the information it had about his properties and companies. The Council also apologised for the length of time the review was taking.
71. In this letter, the Council asked Mr X to clarify, and provide supporting documentation, about occupation of the rooms at Property B. According to the Council, when I asked during my enquiries, Mr X has not yet responded to this request.
72. The Council said because of this, it believes that it has awarded all the SBRR that it can, until Mr X provides further information.

My findings

Council tax liability-Property A

73. There was no fault in how the Council billed Mr X for the outstanding liability on Property A. It followed up Mr X’s billing in line with the council tax listing it had at the time.
74. The evidence shows that while the Council were aware in November that Mr X had applied to the VOA to challenge a rating decision, the VOA had not updated the listing. Mr X’s complaint to the VOA relating to inaction supports this point.
75. In addition, the evidence shows when it was aware Mr X said he had information about the VOA decision, it took steps to verify this by checking the listing application. It also paused enforcement action until Mr X had clarified this with the VOA. That is appropriate decision making and what we would expect to see.
76. The Council sent Mr X two bills for this rating change. This was not fault. The evidence shows the VOA sent two notifications, the latter, altering the effective date from late January until the start of January. The Council acted appropriately and refunded Mr X in response to the first change. However, it took too long to refund Mr X this money after the second adjustment in May. This was fault. I will address Mr X’s injustice at the end of this decision statement.
77. Mr X was unhappy the Council contacted him directly on the telephone, where he had asked for information in writing. This did not cause Mr X a significant injustice and the Council explained why it did this.

Business rate liability

78. Mr X said the Council mismanaged his business rate liability in relation to Property A. In considering the period, December 2021 until beginning of June 2022, there is no fault in how the Council billed Mr X. The Council rightly asserted the VOA is responsible for the rating lists and notifies the Council of any amendments.
79. The Council acted on the information the VOA provided and the alteration schedules supports this. The Council was not at fault. The evidence shows Mr X was chasing the VOA for what he saw as a more accurate representation of a challenge to the rating list he had made.
80. The Council also notified Mr X it would refund any credit due after it had considered his applications for SBRR.

SBRR application and award

81. When the Council sent Mr X the revised NDR bills it had not taken account of a payment he had made in April 2022. Mr X told the Council about this in June and again in July. The Council did not respond to this and refund that money, until after he made a complaint about three months later. That is fault.
82. Mr X highlighted new information to the Council after its stage one reply. The evidence shows when the Council dealt with his complaint at the final stage, it offered a senior manager would review his case. It said because there was still an outstanding matter relating to occupancy at Property B. The Council’s final response also said it could not fault the decision that Company J and K were jointly liable.
83. The Council reconsidered this case and decided to reduce the credit Mr X was due. It was up to the Council to decide Mr X’s occupations and his benefit from rates relief, based on the information available to it.
84. The evidence shows the Council consistently explained how it reached its decisions and when new information came to light, it offered to review them. The Council considered the information Mr X provided and made decisions in line with the law and Government guidance. I find no fault in its decision-making process.
85. I acknowledge Mr X disagrees with the Council’s decision, but there is no evidence of fault in the way it reached its decision, so I cannot criticise it.

Review of Mr X’s liabilities

86. Mr X provided additional information to the Council after the Council’s final response, and it agreed to review its decision. The Council considered this and asked Mr X for more information. Mr X then acknowledged some of the information he (and others) had provided was inaccurate.
87. The Council took no further action and so Mr X complained to us. The Council wrote to and asked Mr X for further clarification and supporting evidence. Mr X has not supplied this information.
88. The Council delayed responding to Mr X after he supplied further information in November 2022. This was fault. It has since requested more information from Mr X, but it cannot complete its review of its earlier decision, as Mr X has not provided the information needed.

Summary of faults and the injustice to Mr X

89. I have highlighted the following faults:
1. three-month delay in processing a refund of council tax credit (£154.36);
2. not accounting for a business rate payment (£400) and a delayed refund;
3. delayed response when Mr X first raised this failure;
4. delay in completing a review offered as a remedy to an earlier complaint.
90. For the fault at a) the Council has already apologised. This is a sufficient remedy for any injustice caused to Mr X.
91. For the faults at b) and c), Mr X was caused an injustice because of the distress and uncertainty about how the Council were managing his business rates accounts. The Council has apologised and refunded money to his account. It also offered a point of contact for future dealings. I find this is an appropriate remedy for the injustice it caused him here.
92. The Council offered to review Mr X’s circumstances and there was a significant period where there was no activity. The Council has apologised to Mr X and given him an explanation. However, the fault caused Mr X an injustice (d) because of frustration and uncertainty. The Council have agreed to my recommendations, which will remedy the remaining injustice I saw.

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Agreed action

93. Within one month of the date of my decision, the Council have agreed to;
• pay Mr X £100 in recognition of the frustration and uncertainty he was caused by the Council’s delays;
• write to Mr X setting out the information it requires to complete its reviews of his liabilities.
94. The Council should provide us with evidence it has complied with the above actions.

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Final decision

95. There was fault causing injustice for which I have recommended a remedy.

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Investigator's decision on behalf of the Ombudsman