Rural Payments Agency

3. Mr E complains on behalf of four companies about the service they received from the Rural Payments Agency (RPA) between July 2023 and July 2024. He complains that:

• The RPA incorrectly stopped payments to the four companies after being informed of ownership changes, and withheld payment for a year • The RPA has wrongly stated that the companies provided incorrect information • The RPA refused to escalate the complaint to the second tier

4. Mr E explained the withholding of payments by the RPA caused serious cash flow difficulties and disruption to operations at all four companies. He explained that all external contractor operations and payments had to be suspended.

5. By bringing the complaint to PHSO, Mr E was seeking to have the RPA pay interest on the withheld payments. He also feels it would be appropriate for the RPA to pay compensation for the impact to the companies during the time these matters were under dispute.

6. Mr E complains on behalf of four businesses (one of which is his own) which were in receipt of farming payments from the Rural Payments Agency (RPA).

7. In July 2023, Mr E provided the RPA with updated ownership details of the four businesses which, at the time, were receiving payments as participants in RPA’s Basic Payment Scheme (BPS). In response, RPA asked Mr E to complete two forms for each company:

• An IACS 26 (Separate Business Questionnaire) • An IACS 27 (New Business Questionnaire)

8. It suspended payments pending the completion of these forms.

9. In September 2023, Mr E contacted RPA and challenged the need for submission of these forms. He said they applied to partnerships whereas the businesses concerned were, in fact, limited companies. As a result, the forms did not apply in this instance. During that month, he made several requests for RPA to show him where the ‘Rules’ stated he was required to complete these forms.

10. In October 2023, RPA responded to Mr E’s challenge. It explained that, under the rules, if someone had two or more businesses, they must be treated as a single entity (for RPA purposes), even if they are treated as separate elsewhere (for example, for tax purposes). RPA said it had suspended payment because Mr E had not completed the requested forms. RPA said the rules applied to limited company in the same way as other businesses. RPA said Mr E was welcome to challenge the suspension through the court system and/or complain to our office if he was not satisfied with RPA’s handling of the matter.

11. In November 2023, Mr E contacted RPA and said he was unhappy it had treated his contact as a formal complaint (because he had not, at that stage, submitted one). RPA responded and said it treated any expression of dissatisfaction as a complaint and therefore responded appropriately. RPA acknowledged that Mr E had now submitted the relevant IASC forms but noted they had not been fully completed. RPA said it could not progress the matter further until the completed forms were received.

12. In response, Mr E submitted the forms again and said there had been no changes to the structure of the relevant businesses. RPA again rejected the forms as not properly completed. It said Mr E had answered ‘N/A’ to some of the questions which RPA said was not acceptable. It again said it would not progress the matter until Mr E had completed the forms fully.

13. Over the next month, Mr E continued to contact RPA and insisted he had provided it with all the relevant information. He said RPA had wrongly equated partnerships with limited companies and had failed to realise that the forms did not apply in his circumstances. He also asked when the withheld payments would be released.

14. In December 2023, Mr E sent RPA a spreadsheet which set out the ownership and directorship details for each of the companies. RPA responded and said it was continuing to review the information Mr E had provided.

15. In February 2024, RPA wrote to Mr E and said it was unable to release payments until Mr E could provide detail of ‘the natural persons who own and control’ each of the companies. It also asked Mr E to explain why the ownership and directorship details provided in December 2023 appeared to differ from the information he had provided in July 2023. It also said the information he had provided differed from ownership and directorship information held and recorded by Companies House. RPA detailed the discrepancies between the various pieces of information and asked Mr E to confirm who owned the relevant businesses.

16. Mr E responded and said he had already provided this information. He said the companies were not ‘owned’ by any one person but were entities in their own right. He said the relevant businesses had always operated separately.

17. Over the next few months, Mr E contacted RPA several times to ask when the payments would be released. He also sent further copies of the relevant forms. RPA responded and said it was still reviewing the information.

18. In June 2024, Mr E submitted a formal complaint to RPA about what had happened. He said he had submitted the relevant forms in April 2024 but had heard nothing since.

19. In July 2024, following further contact from Mr E, RPA released the withheld payments. It said it had completed its enquiries and was now satisfied that the relevant businesses operated separately.

20. In August 2024, Mr E contacted RPA and asked it to pay interest on the withheld payments, together with compensation for the financial inconvenience it had caused. RPA responded and said it would not be making a payment of this kind. It said it had a duty to protect the public purse and could not have made the payments without evidence of eligibility. RPA said any ‘delay’ in making the payments had been the result of Mr E’s failure to provide the information it had asked for. It said it had also needed to explore the discrepancies in ownership information it had referred to in February 2024. It said there was no evidence of maladministration on its part. Therefore, a compensatory payment was not appropriate. It said if Mr E remained unhappy, he could ask an MP to bring his concerns to our attention.

What Mr E told us

21. Mr E told us that, in his view, RPA had acted dishonestly when it said he had failed to provide it with the relevant information. He said RPA had failed to understand its own rules and the law. Because of this, its decision to withhold payment had been unjust and unlawful.

What RPA told us

22. As part of our consideration of this complaint, we asked RPA why it had eventually decided to lift the suspension and release the payments. It explained that, although Mr E had still not fully provided all the information it had asked of him, it had eventually made its own enquiries separately (which included a further review of the Companies House records). It said it had been satisfied from these that the companies were operating separately

25. To put this complaint, and our decision, in context, it would be helpful to explain more about the IASC system.

26. RPA’s Integrated Administration and Control System (IACS) sets out the rules RPA must follow to make sure it has the information it needs to manage its schemes (including the BPS). Under the IACS rules, if someone has two or more farming businesses RPA may have to treat them as a single farming business even if the customer treats them as two businesses for other purposes, for example, national tax purposes.

27. Participants in the scheme need to tell RPA how their business is structured as this may affect any payments they are entitled to receive. The participant must tell RPA as soon as possible about any changes to the structure and, or status of the business.

Separate Business Questionnaire (IACS 26)

28. According to RPA’s website, participants should use this form to tell RPA if they are • involved in more than one farming business; and/or • splitting their business into two or more businesses.

29. RPA say that, in all cases, it needs all relevant parts of the form to be filled in. It says that, if someone has an interest in other farming businesses, they should send supporting documents to RPA, for example, which show the legal status of the businesses and any sharing arrangements. The participant needs to fill in a separate form for each business they have an interest in.

30. RPA advise that participants should read the guidance carefully while filling in the form. It adds that, where the guidance asks for additional or different information from the form, please give the information RPA has asked for as it reflects what RPA needs to make the assessment. RPA adds that, if someone has any questions about filling in the form, or about the guidance, they should call the Rural Payments helpline.

New Business Questionnaire (IACS 27)

31. According to RPA’s website, participants should use this form to tell RPA if they are changing a business currently registered on the Rural Payments service, for example: • changing the business structure • adding to an existing business • splitting an existing business into 2 or more businesses • merging 2 or more businesses • a partner has joined or left the business

32. RPA says it will use the information provided to determine whether the business can continue under its current Single Business Identifier (SBI), or if RPA needs to generate a new one. RPA say that, if the form is missing information or the person has not sent the relevant supporting documents, RPA will not be able to process it.

Withholding of Payments and provision of information

33. There is a clear dispute between Mr E and the RPA about whether, by law, the IASC process applies to Limited Companies. We should say from the outset that it is not part of our role to resolve that dispute. Only a court can do that. We can look only at whether RPA followed a reasonable administrative process.

34. Before we decide if we should conduct a more detailed investigation of a complaint, we look at whether there are signs the organisation has got something wrong. We look at existing policy to see how the organisation should have responded and compare this to what steps were taken. We have done this and have not found any indications that something has gone wrong.

35. As RPA explained to Mr E, it has a duty to protect the public purse by ensuring that it only makes payments to individuals and/or organisations eligible for, and entitled to receive, those payments. This is in line with our Principles of Good Administration – acting fairly and proportionately – under which we expect organisations to bear in mind the proper protection of public funds.

36. We can see that, in this instance, the information Mr E in July 2023 prompted RPA to consider how this affected the relevant business structures and subsequent entitlement to payment. This was in line with its published IASC guidance. Under our Principles of Good Administration – getting it right – we expect organisations to follow their own policy and procedural guidance. We are satisfied that, by asking Mr E to provide further information (by completing the relevant forms) RPA acted in line with our expectations.

37. We recognise Mr E’s view that the forms did not apply to his circumstances (and, for the reasons we have set out earlier, we can take no view on that). However, we cannot say RPA’s request for him to complete these forms was unreasonable. Unfortunately, Mr E’s reluctance to fully complete them is what caused the initial delay in RPA making the payments.

38. We can further see the issue was compounded when Mr E presented ownership and directorship details in December 2023 which appeared to differ from the information, he had presented five months earlier. As we have said, RPA needed to satisfy itself that the companies Mr E was representing were entitled to receive the money they expected. Unfortunately, RPA was not satisfied, largely again because of Mr E’s failure to provide the information requested.

39. We recognise Mr E’s view that he had provided this information in other formats, and at other times but sadly his inability to provide it in a way that RPA had clearly requested led to the matters being prolonged for longer than he may have wished.

40. With this in mind, we find no failing on this point.

41. We recognise Mr E’s concern that the delay in releasing the payments caused financial hardship for him and for the businesses he was representing. We therefore understand his frustration that RPA refused to pay interest on the backdated payments or financially compensate him (and others) for the inconvenience.

42. Remedying injustice and hardship is a key aspect of our work. However, whilst we expect organisations, where possible, to put right what has gone wrong, we would only expect them to provide a financial (or other) remedy when the injustice was the result of maladministration. We have seen nothing to suggest in this case that the delay in releasing the payments, however frustrating, was the result of maladministration by RPA. For that reason, we cannot say it was wrong to reject Mr E’s request for compensation.

Complaint Escalation

43. At the time of these events RPA operated a 3-step complaints procedure.

• Step 1 – Query - The complainant needed to raise with a query with RPA about an action it has taken. The person making the complaint needed to give RPA details of what happened (and when), how their business was affected and how they would like RPA to settle the matter. The relevant team from RPA would review the query and respond.

• Step 2 - Formal complaint - If the person remained unhappy with RPA’s response to their initial query, they could usually raise a formal complaint. RPA encouraged people to use a formal complaint form (called a CA4) but this was not mandatory. The person needed to explain why they were unhappy with the initial query.

• Step 3 – Appeal - If the person was not satisfied with the response to their complaint, they could appeal. There were 2 routes to follow depending on whether the complaint was about the service received or to challenge a decision. For service complaints the person could ask an MP to raise their case with our office. The person could formally appeal against a decision if they disagreed with it. The Appeals team would review the decision and, if it decided the decision should stand, it would refer the case to an Independent Appeals Panel

44. Mr E complains the RPA refused to escalate the complaint to the appeal stage. He notes that several stage 1 complaints were made without a resolution and explained that on 25th June 2024 an appeal form was submitted for each company. He told us that the complaint form provides for a panel of external reviewers to consider the appeal. Mr E says all requests for appeal were disregarded by the RPA in order (he believes) to avoid external scrutiny.

45. We raised this issue with the RPA and ask for it to outline its position on Mr E’s claim that it refused to escalate the complaint. The RPA disputes the idea that Mr E was prohibited from moving through the complaints process, explaining that it was his decision not to supply information concerning the business structure that was the basis of his complaint. It said it re-iterated several times that this information was necessary and within its jurisdiction to request it.

46. RPA explained it advised Mr E where its authority stemmed from and provided the regulatory requirements. RPA’s position was that the original complaints were about its authority to ask for this information, and about business law that had no impact on its requirement for information. The RPA explained that in cases where the complaint is regarding the requirement to supply information there is no appeals process.

47. We are satisfied from what the RPA told us that it acted in line with its published complaint procedure. This was, in essence, a complaint about its service, not a complaint about a decision. As such, the appropriate route for escalation was to our office, not to a formal appeal. The evidence shows that RPA twice made Mr E aware of this (in October 2023 and again in August 2024). We would not have expected it to do more.

48. We were sorry to learn of the circumstances which led to Mr Es’s approach to our office. We realise that the outcome of his approach is unlikely to be the one he was hoping for. We also recognise his likely disappointment at this and hope we have clearly explained the reasons for our decision.

1. We have carefully considered Mr E’s complaint about the Rural Payments Agency (RPA). We would like to thank Mr E for bringing this complaint to our attention.

2. Having considered the available evidence, we have seen no indication that anything went seriously wrong, and there are no indications of maladministration on the part of the RPA.