Summary: Mr X complained that the Council wrongly held him liable for business rates on a property, failed to properly investigate the correct liability, and inappropriately pursued enforcement action. We have concluded our investigation with a finding of fault. The Council failed to take reasonable steps to investigate the correct liability for business rates, acted on incorrect assumptions, and allowed enforcement to proceed on a liability it has since accepted was incorrect. It also failed to report concerns to the Valuation Office Agency, contrary to its duty as a billing authority. The Council has agreed to our recommendations.

The complaint

1. Mr X alleges that the Council wrongly charged business rates on a property for which he was not liable, due to a failure to investigate the correct liability. This led to enforcement action, including a summons and recovery agents, causing financial hardship and emotional distress. Mr X says the Council did not fulfil its legal duty to notify the Valuation Office Agency (VOA) about the issue. As a result, Mr X says he incurred costs and significant inconvenience while attempting to resolve the matter. While the Council has amended the billing and waived some costs, Mr X seeks a remedy for the impact and inconvenience.

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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’. If there has been fault which has caused significant injustice, or that could cause injustice to others in future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. 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

4. I considered evidence provided by Mr X and the Council as well as relevant law, policy and guidance.
5. Mr X and the Council were offered an opportunity to comment on my draft decision. I considered any comments before making a final decision.

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What I found

Relevant guidance and legislation

Local Government Finance Act 1988

6. This sets out the statutory framework for the rating of non-domestic properties and the responsibilities of billing authorities. Councils must determine the liable party for business rates and issue bills accordingly. Liability usually falls on the party in actual occupation of the property.

The Council’s duty to investigate liability

7. Billing authorities must take reasonable steps to verify the correct liable party before issuing enforcement action. This includes reviewing relevant occupancy information, lease agreements, and property configurations. If there is ambiguity, they should make further enquiries and not rely solely on assumptions.

Billing Authority Reports (BARs)

8. Where a council becomes aware of information that may indicate an inaccuracy in the rating list, it has a duty to report this to the Valuation Office Agency (VOA) via a BAR. Councils should not wait for ratepayers to take action where they hold information suggesting a discrepancy.

Atos v Fylde BC [2020]

9. In Atos v Fylde BC [2020], the High Court held that a billing authority cannot abdicate its responsibility to notify the Valuation Office Agency (VOA) of a potential inaccuracy in the rating list by shifting the burden entirely onto the ratepayer. The Court confirmed that a billing authority, such as a Council, has a public law duty to act on relevant information it holds or receives, which includes querying apparent errors with the VOA. The judgment emphasised that Councils must not adopt a passive stance when there are clear indicators of possible error or uncertainty in rateable liability or assessment.

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What happened

10. Mr X owns a property on Road 1 which includes upper floor office premises referred to by the Council as A Road 1. The ground floor and basement of the same building are separately assessed by the Valuation Office Agency (VOA) as B Road 1 and have been let to Company A since 2022.
11. In January 2022, the Council issued a business rates bill to Mr X for the property at A Road 1 covering the period January to March 2022 (Bill 1). Mr X paid this bill in full. In October 2022, the Council issued a further bill for the 2022/23 financial year (Bill 2). When payment was not received, the Council obtained a liability order and referred the case to enforcement agents. In March 2023, the Council issued a third bill for the 2023/24 financial year (Bill 3).
12. Mr X disputed the business rates liability and explained that the upper and lower parts of the building were occupied by the same tenant, Company A. In July 2022, the Council attempted a site visit but did not gain access. No further visit was arranged. The Council did not raise a formal query with the VOA at that time.
13. Mr X later provided a copy of the lease in September 2023, which confirmed Company A had been in occupation since July 2020. The Council reviewed the lease and agreed that liability for business rates should not have been assigned to Mr X. It amended the billing to reflect that Company A was the liable party and confirmed it would issue amended bills.
14. The Council also issued a summons for the 2023/24 bill (Bill 3). This was after Mr X had raised his concerns and provided evidence. The Council withdrew the summons and waived the associated costs.
15. Mr X, through his representative, complained to the Council. He said he had experienced financial hardship, stress, and inconvenience as a result of being wrongly held liable for business rates. The Council accepted that liability should have been amended earlier and offered to pay £150 in recognition of the inconvenience caused.

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Analysis

Incorrect liability and failure to investigate

16. Councils are responsible for determining business rates liability under the Local Government Finance Act 1988. Where there is uncertainty about occupation or hereditament boundaries, they must take active steps to verify who is liable and whether the property has been correctly assessed. This is not merely good administrative practice but a public law duty that flows from the Council’s statutory responsibilities and principles of fairness. In Atos v Fylde BC [2020], the High Court confirmed that billing authorities cannot delegate responsibility to the ratepayer to correct errors where there are grounds to suspect inaccuracy. Authorities must proactively act on relevant information and raise concerns with the Valuation Office Agency (VOA) where appropriate.
17. In this case, the Council issued bills to Mr X for A Road 1 on the assumption that it was a distinct and separately occupied hereditament. However, the Council held information that should have prompted a more thorough investigation of the liability. In particular:
• The Council’s site visit in July 2022 did not confirm who was in occupation but was not followed up, despite being inconclusive.
• Company A had registered as the business ratepayer for B Road 1 in May 2022, suggesting a potential overlap in occupation across both assessments.
• These issues arose before the 2022/23 bill was issued, yet the Council took no steps to verify whether A Road 1 was correctly billed.
• Mr X later provided a lease in September 2023, confirming Company A had been in occupation since July 2020.
18. The Council has since accepted that Mr X was not the liable party. However, it had multiple earlier opportunities to question its assumptions and confirm the correct position. Its failure to do so was a lack of reasonable diligence and was fault. As a result, Mr X was wrongly billed for over a year and exposed to enforcement action for a liability he did not owe.

Enforcement action and escalation

19. The Council began enforcement action on Bill 2 in March 2023, including issuing a summons, obtaining a liability order, and referring the case to enforcement agents. It says no dispute had been raised before this point and it acted in line with normal recovery procedures.
20. However, by that time the Council already held information which ought to have prompted further checks. In July 2022, it attempted a site visit to establish occupancy at A Road 1, but no access was gained and the visit was inconclusive. The Council did not follow this up. It also knew that Company A had registered at B Road 1 in May 2022, indicating a potential overlap in occupation. These signs pointed to a possible hereditament merger or at least a need to clarify who was in occupation. The Council did not take steps to do so.
21. The Council had received payment for Bill 1 earlier in 2022, but that did not absolve it of responsibility to ensure that liability remained accurate as new periods accrued. In the context of Atos v Fylde BC, councils retain a duty to test their assumptions about liability, particularly where available information casts doubt on occupation or assessment.
22. On balance, we consider the enforcement action on Bill 2, while procedurally compliant, was avoidable. It was triggered by earlier failures to properly investigate liability. The Council allowed recovery to proceed based on assumptions it had not verified, despite warning signs which should have prompted further enquiry. This led to avoidable distress and enforcement agent fees of £463 for Mr X.
23. The Council has waived the summons costs associated with Bill 3, but not the enforcement costs associated with Bill 2. These arose directly from the fault identified above.

Communication about the VOA

24. The Council advised Mr X to raise concerns directly with the Valuation Office Agency (VOA). While it can be appropriate for councils to direct ratepayers to the VOA in some situations, this does not remove the Council’s own responsibility to act where it holds relevant information.
25. Its duty to report such matters arises from its statutory role and is supported by public law principles requiring fair and proactive administration. Where there are reasonable grounds to believe the rating list may be inaccurate, councils should consider submitting a Billing Authority Report (BAR). In this case, there were clear indicators of a potential hereditament anomaly by mid-2022, but the Council did not follow these up or notify the VOA. This was not in line with good administrative practice and fell short of the Council’s responsibilities as a billing authority.

Injustice and remedy

26. Mr X experienced financial hardship and inconvenience. He reports borrowing money and using credit cards to make business rates payments. He also incurred time and stress in challenging the Council’s position and responding to enforcement action. The Council has acknowledged delay in amending the liability and has offered £150 in recognition of inconvenience.
27. Given the identified fault and avoidable escalation, I consider there is scope for an improved remedy. Mr X incurred fees, time and stress that could have been prevented had the Council acted on the indicators available to it from mid-2022 onwards.
28. While this case concerns individual fault and injustice, similar issues have the potential to affect others, particularly small business owners, leaseholders, or those unfamiliar with the business rates system. Billing authorities play a central role in assessing and enforcing liability and are expected to act with diligence where there are signs of inaccuracy. Acting on untested assumptions or pursuing enforcement without resolving known concerns risks broader unfairness and can undermine trust in local tax administration.

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Agreed action

29. To remedy the injustice caused by its fault, the Council will take the following action:
1. Waive the enforcement agent fees of £463 incurred in relation to Bill 2. This reflects the fact that enforcement action flowed from a liability the Council now accepts was incorrect and should reasonably have been clarified earlier.
2. Make a symbolic payment of £400 to Mr X to recognise the avoidable time, trouble, distress, and financial impact he experienced in resolving the matter. This includes the stress of enforcement action, the need to gather and submit evidence, and the inconvenience caused by being pursued for a liability he did not owe.
3. Provide a written apology to Mr X acknowledging the failings identified in this investigation. The apology should reflect the Council’s failure to properly investigate liability, its delay in correcting the error, and the resulting impact on Mr X. The apology should be in line with our published Guidance on Remedies.
4. Review its procedures for investigating business rates liability where there is uncertainty or conflicting information. This should include:
1. Ensuring site visits that do not resolve occupancy status are followed up promptly.
2. Clear internal escalation routes for potential hereditament anomalies.
3. Reminders to staff of the Council’s duty to notify the VOA where appropriate.
30. The Council will complete action points a to c within one month of the Ombudsman’s final decision and action point d within two months of the Ombudsman’s final decision.

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Decision

31. Mr X complained that the Council wrongly held him liable for business rates on a property, failed to properly investigate the correct liability, and inappropriately pursued enforcement action. We have concluded our investigation with a finding of fault. The Council failed to take reasonable steps to investigate the correct liability for business rates, acted on incorrect assumptions, and allowed enforcement to proceed on a liability it has since accepted was incorrect. It also failed to report concerns to the Valuation Office Agency, contrary to its duty as a billing authority. The Council has agreed to our recommendations.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman