The Ombudsman's final decision
Summary: It took some time for Mr B to resolve various business rates accounts, but in the main there was no fault by the Council. It responded to Mr B’s contact, and it was entitled to take recovery action based on the information it had, and to recover the costs of this. The Council took too long to adjust one account, but this did not cause Mr B significant injustice as there was no recovery on that account at the time.
The complaint
Mr B complains that the Council wrongly made him liable for business rates. When he disputed this it did not resolve the dispute and instead pursued him via court action and bailiffs to recover the amounts. It credited payments to an account with a nil balance so that other accounts fell further into arrears.
Mr B says that as a result of the Council’s shortcomings, he has had to pay large amounts to bailiffs and their fees when this action was unnecessary. This means that he has suffered financial crisis, debt and depression.
What I have investigated Mr B has pursued this for many years. We normally expect a person to complain to the Ombudsman within 12 months of the events. However, in this case I am exercising discretion to investigate events from 2015 in so much as these inform the Council’s later actions. This is because I cannot separate out the earlier actions from the later demands for payment and enforcement action.
The Ombudsman’s role and powers
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) We cannot investigate a complaint about the start of court action or what happened in court. (Local Government Act 1974, Schedule 5/5A, paragraph 1/3, as amended) 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)
How I considered this complaint
I considered the information provided by Mr B and his representative. I considered the information provided by the Council including its file documents. I also considered the law and guidance set out below. Both parties had the opportunity to comment on a draft of this statement.
What I found
The law and guidance Business rates is the tax on local business premises. Each property is given a rateable value by the District Valuer. The Valuation Office Agency (the VOA) decides if a property should be rated and its rateable value. If someone wants to challenge the VOA’s decisions they have the right of appeal to the Valuation Tribunal. The Ombudsman has no remit to investigate the VOA.
Small business rate relief (SBRR) is awarded if a business has one property and its rateable value is less than £15,000. There is no right of appeal or review against the application of SBRR.
Liability to pay the rates is decided in the magistrate court. After issuing reminders, the Council can apply to the magistrates court for a liability order. A person can appear in court to defend the court granting the order. If the complainant knew about the court hearing we cannot investigate the issues considered by the court.
A liability order gives the Council legal powers to take enforcement action to collect the money owed. The council can decide which recovery method it wishes to use. This can include using bailiffs acting on the Council’s behalf and the Council retains responsibility for the bailiffs actions.
What happened
Background
Mr B is the tenant of a site with several business units. The Council made him liable for business rates on one unit in 2014. However, the Council received no contact or payments from Mr B. The court granted a liability order and the Council tried to contact Mr B to discuss this, but then passed the account to the bailiffs. Mr B had the help of a friend who told the Council that he struggles to manage bills and paperwork. Some payments were made and the Council also awarded Mr B SBBR.
By 2016, Mr B had expanded his business. The VOA gave the Council details of the rateable value of a further unit and the land. The landlord told the Council that Mr B was now the tenant of the land, and the two units. The Council removed the SBBR from the first unit in line with the rules on this. It understood that Mr B might be subletting the second unit (which would change his liability) and it wrote to him for details of this, but it got no reply.
The Council sent Mr B bills for the two units and the land. With no payments or contact from Mr B, the Council sent reminders and then obtained liability orders on all three accounts and sent these to the bailiffs to collect. The bills and subsequent letters showed which premises the Council was collecting rates on.
In November 2017, Mr B’s friend contacted the Council again. She said that Mr B had not been opening his letters, and they cannot understand these as he only has the one, slightly expanded unit. The Council responded. It asked for details of any sub-tenant of the second unit and put recovery on hold.
However, the Council received no further contact from Mr B or his representative until February 2019. In the meantime, the Council continued with enforcement action on the three accounts, including bailiff action. Mr B says the bailiffs said if he did not pay it would seize goods at his premises (some of which did not belong to him) and sell them the next day. To avoid this, Mr B says he had to empty his bank account and then agree to monthly payments that he could not afford. Mr B says this has impacted on his ability to run his business and his mental health. In total Mr B paid the bailiff £21,000.
In February 2019, Mr B’s friend told the Council they had both been trying to challenge the rateable values with the VOA as it was clear that they were too high. The VOA’s online system would not let them do that and its own staff could not make the system work or allow them to submit the review request manually. The Council again placed the recovery on hold to allow Mr B to challenge the VOA’s listing.
The land In March 2019, Mr B told the Council he was not the tenant of the land. The Council asked for proof of this and put a hold on recovery action on the account. The Council extended the hold on recovery until June 2019. In November 2019, Mr B told the Council he had been trying to get his landlord to confirm he was not the tenant of the land but they had not. He gave the Council the landlord’s details and the Council twice wrote to the landlord to query this.
The Council continued to send bills and reminders. Finally in January 2021, the Council received written confirmation from the landlord that Mr B was not the tenant. The landlord’s letter says that it had already confirmed the true tenant’s details. In February 2021, the Council sent further reminders and in March the new year’s bill. At the end of April the landlord wrote again to the Council to reconfirm that Mr B was not the tenant of the land. In June, the Council asked the bailiff to return the account and in August it amended the records so that Mr B was never liable for the land. It confirmed all of this to Mr B.
I appreciate that Mr B had tried to get confirmation that he was not the tenant of the land earlier in 2019, and the landlord delayed in giving this, but this was not fault by the Council. It acted on the information it had. It was entitled to issue demands for payments and to instruct bailiffs to collect the debt.
However, the Council took too long to resolve this account. It had confirmation from the landlord in January 2021 and again in April 2021. But the Council continued to issue reminders and a new bill. It took around six months from when it first had confirmation from the landlord to properly act on this. This was fault by the Council.
I can see that this would add to Mr B’s frustration and distress, but my understanding was that no recovery action took place on this account during this period of delay and so the injustice to Mr B was limited.
The sub-let unit With regard to the sub-let unit, the Council had sought details from Mr B about any sub-tenant since it made him liable in 2016. Mr B had told the Council in March 2019 that he sub-let the unit. The Council asked for proof of this and put a hold on recovery action. The sub-tenant was finally confirmed by a visit to the site in October 2021 and that November, Mr B sent the Council the sub-lease, and the sub-tenant himself confirmed he had been there since January 2018. The Council amended the account the next day so that Mr B had no liability of this unit. It refunded the payments made against it totalling £3,347. The Council explained that it would not refund the court costs or the bailiff fees because the court action had been correctly taken on the information it had at the time.
There was no fault by the Council on this account. The bills and reminders were clear that this was for a different unit than the one Mr B had always occupied. The Council had asked Mr B for any sub-tenant details since it had opened the account and a number of times since, and it was for Mr B to get this information to the Council.
Mr B’s main unit In terms of the unit that Mr B had always occupied, there were two factors which made the business rates charges wrong. The unit was wrongly valued by the VOA based, as I understand it, on the details given by the landlord. However, Mr B also lost his SBRR because the Council had no proof that he was not also occupying the land and the sub-let unit.
Mr B and his representatives had difficulty submitting requests to the VOA for it to review the rateable value of his unit. He kept the Council informed some of the time. The Council’s records show that it did respond to his contacts and at times placed bailiff action on hold. But the Council could not properly correct this account until the VOA notified it of the new rate and Mr B had given it details of the sub-tenant (allowing the Council to reapply the SBRR). These two actions did not happen until the VOA changed the listing in August 2021 and the Council had proper details of the subtenant in October 2021.
I appreciate that Mr B and his representatives appear to have had significant problems dealing with the VOA. However, the Ombudsman cannot investigate the VOA. The Council’s notes show it put a hold on recovery action several times, to give Mr B the opportunity to challenge the VOA but his contact over the years with the Council was relatively low. It was not fault for the Council to continue with recovery action when it had no contact from Mr B about his review. In addition, the VOA’s review in itself did not make the most significant difference to the account. That came from the Council being able to re-apply the SBRR when it had proof that this was Mr B’s only unit. The delay in doing that was mainly by Mr B and his landlord.
The allocation of payments Mr B says the Council allocated payments to the sub-let unit account when it should not have done so and this meant that he fell into arrears on his main unit. However, the Council has explained that payments are credited to the account the person makes the payment to, and its system does not stop payments being made to an account with no balance owing.
There was no fault by the Council in the allocation of payments. It was for Mr B to make payments to the most appropriate account. In addition, although Mr B says the Council made payments to an account with a nil balance, the account was not made nil for some time and I am not persuaded it had a nil balance when the majority of the payments were allocated to it.
Conclusion
Overall, I can see that the situation was confusing and Mr B faced many obstacles in getting the accounts resolved. However, these were largely out of the Council’s control. It was not wrong to pursue recovery when it had little contact from Mr B, and it was not wrong to demand payment for its costs when the court action was correctly taken on the information it had at the time. There was some fault when the Council took too long to amend the land account, but this did not cause Mr B significant injustice as there was no further recovery action on this.
Final decision
I have completed my investigation. There was fault but no injustice to Mr B.
Parts of the complaint that I did not investigate 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) Mr B has complained about the bailiff’s actions and says when the bailiffs first made contact they made threats to seize the goods and sell them, which legally they could not do. The bailiffs acts on behalf of the Council and the Council remains responsible for their actions. However, the actions complained about happened in around 2018 and 2019, more than 12 months before Mr B made the complaint to the Ombudsman. I understand that Mr B has great difficulty dealing with his paperwork, but he had help from representatives and could have brought this complaint to the Council and to the Ombudsman sooner. For this reason, I have not investigated Mr B’s complaint about bailiffs.
Investigator's decision on behalf of the Ombudsman