Summary: Mr X complained the Council has not properly considered whether it should award him relief on the business rates he owes. The Council are not at fault. It applied business rates exemptions where appropriate and explained its reasons when it refused.

The complaint

1. Mr X complained the Council has not properly considered whether it should award him relief on the business rates he owes. Mr X says he is suffering financially and this is also impacting on his mental health.

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The Ombudsman’s role and powers

2. 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)
3. 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)
4. 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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What I have and have not investigated

5. The Ombudsman does not usually investigate complaints which are more than 12 months old. Mr X’s complaint covers several years. The Council considered Mr X’s complaint in 2022, we consider this brings this within our jurisdiction.

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How I considered this complaint

6. As part of the investigation I have considered the following:
• The complaint and the documents provided by the complainant.
• Documents provided by the Council and its comments in response to my enquiries.
• The Local Government Finance Act 1988, The Non-Domestic Rates (Collection and Enforcement) (Local Lists) Regulations 1989.
7. Mr X and the Council had 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 legislation

8. 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.
9. The business rates bill for the year is due on 1 April. A council will usually collect payment through monthly instalments. If any instalment is missed, the council will send the liable person a reminder. If a payment is still not made or a further payment is missed, then the entire outstanding balance will be due (that is the full amount for the rest of the year).
10. To use the powers available to it to recover unpaid business rates, a council must apply to a magistrate’s court for a liability order against those it believes are liable. Once a council has obtained a liability order it can take recovery action.
11. A liability order gives a council the legal power to take enforcement action to collect the business rates and court costs owed. It can then use enforcement agents, take insolvency proceedings or ask a court to send the debtor to prison for non-payment. The council can decide which recovery method to use but it can only use one method for one liability order at one time.

Small business rate relief

12. 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).

Empty property rates

13. If a business property is empty, the owner does not have to pay business rates for three months. Industrial premises get a six-month rate free period. After that, unless an exemption applies, the property is charged full rates. The exemptions are for listed buildings, buildings with a rateable value of less than £2,900 and properties owned by charities or community amateur sports clubs where the next use will mostly be by a charity or sports club.

The Council’s policies and procedures

The Council’s website

14. The Council’s website explains several discounts, exemptions and reliefs from business rates.
15. Small business rate relief is available if the property’s rateable value is less than £15,000 and the business uses only one property.
16. The website also gives information for unoccupied properties and how they can apply for SBRR. It says business rates will not be payable the first three months that a property is empty. After this period, rates are payable in full.
17. The website refers to hardship relief (HR) which it has discretion to award in exceptional circumstances. In response to my enquiries the Council sent a copy of its Discretionary Rate Relief Policy applicable from April 2016 onwards and its Discretionary Rate Relief and Hardship Policy dated 2023 to 2026. As most of Mr X’s complaint is from 2022 and before, it is mainly the 2016 policy which applies.

The Council’s Discretionary Rate Relief Policy from 2016

18. The policy explains HR and refers to section 49 of the Local Government Finance Act 1988 which it says gives the authority discretion to cancel all or part of a ratepayer’s debt if it is satisfied they will suffer hardship if it did not. The authority must be satisfied it is reasonable, having regard to the interest of local taxpayers. Applications are considered on their own merits. Examples of when the HR has been applied are where the ratepayer or a member of their family is dying of an incurable illness, or the ratepayer manages a shop or service to the local community which could not be replaced if they stopped trading.
19. The policy states reduction in business rates on the grounds of hardship should be the exception rather than the rule. Generally, claims for hardship in respect of an empty property will not be considered on the basis that the premises could be sold or let at a low rent to relieve the owner of rate liabilities.
20. HR is only given for short periods where there is clear evidence of hardship.
21. HR is not granted for a retrospective period. It cannot be applied to the previous financial year.

The Council’s Discretionary Rate Relief and Hardship Policy 2023 – 2026

22. The hardship relief policy 2023 is very similar to the 2016 policy.

What happened

23. I have summarised below the key events; this is not intended to be a detailed account.
24. Mr X took a seven-year lease for a business property and opened a restaurant. He told me he did not know the lease was for seven years when he signed the paperwork. He said he did not check the agreement and his solicitor did not advise him of the length of the agreement.
25. Mr X said he paid Business Rates when he opened the restaurant. He said he ran the business for about three to four months, but it was not successful. Mr X closed the restaurant. He said it has been shut since 2015.
26. When Mr X closed the restaurant, he said he stopped paying business rates and told the Council he could not afford to pay. In conversation with me, Mr X said he did not apply for any business rate relief as he thought he did not have to pay when the business was shut.
27. The Council’s records show Mr X made payments in May, June and July in 2014.
28. In response to my enquiries, the Council said Mr X received SBRR on the property from 1 April 2014 to 14 July 2015. The property was listed as occupied.
29. The Council said Mr X received EPR from 15 July 2015 to 14 October 2015.
30. Mr X said he owes around £30,000 in business rates, fees and charges. Information received from the Council show Mr X owes business rates from April 2014 to May 2021.
31. Mr X’s solicitor wrote to the Council in September 2019 requesting SBRR on the empty property.
32. In October 2019, the Council responded to the solicitor’s letter and said it was unable to grant the relief as the property was empty.
33. Mr X complained to the Council in July 2022. The Council responded to Mr X’s complaint the same month. It said it was unable to consider an application for discretionary or hardship relief as the property was not occupied. It did not uphold his complaint and advised the business rates remain payable. It said it would work with Mr X to come to a reasonable payment agreement.
34. The Council responded to Mr X’s stage two complaint in October 2022. It said Mr X was the owner of the property from November 2013 to May 2021. As Mr X did not occupy the property from October 2015 onwards, it said it could not give HR. It advised Mr X of the balances payable and said it would agree a reasonable agreement for repayment.
35. Mr X complained to the Ombudsman in May 2023. He said the Council insists on him paying business rates on a property that is empty. He said he ran the business for six months at a total loss. He abandoned the building, shut the business from 2014 to 2021 and had no actual occupation. He does not consider he should have to pay business rates.

Analysis

36. The Council’s records listed Mr X’s property as occupied from April 2014 to July 2015 and granted SBRR for this period. Mr X said he closed his business in 2015. SBRR is only available for periods when the premises is occupied. The Council considered and applied SBRR whilst the premises was occupied. It cannot give Mr X SBRR for the period when his business was shut and the premises was not occupied, the legislation does not allow it. The Council is not at fault.
37. When the Council was aware the property was empty in July 2015, it granted Mr X EPR for three months. EPR is only available for empty properties for a three-month period. After three months, business rates are charged at normal rate. The Council correctly applied legislation and policy and granted Mr X EPR for the first three months it was aware the property was empty. Mr X received the full award. The Council is not at fault.
38. The Council considered whether it could apply HR following the solicitor’s letter dated September 2019. The policy says HR is the exception rather than the rule and is only granted in very limited circumstances. The Council said as the property was empty, it was unable to provide HR. As set out above, HR will generally not be applied to empty properties as the property could be let at a low rent. The Council applied its policy correctly and considered HR was not appropriate because the property was empty.
39. The examples in the policy where HR may be granted do not apply to Mr X. He has not said he or a member of his family was suffering with an incurable illness. It cannot be said his premises is providing a service to the local community which cannot be replaced if it closed, as it is already closed.
40. The Council’s policy states it cannot apply HR retrospectively. It can only consider HR for the current financial year. It cannot consider awarding Mr X HR for the period when his business was operational and the property was occupied as this is now out of time.

Summary

41. The Council applied both SBRR and EPR when these were appropriate. The reliefs are restricted and time limited and no longer apply to Mr X. The Council correctly considered legislation and policy when granting and removing the reliefs.
42. The Council considered legislation and policy for HR when it received the application from Mr X’s solicitor. His application was declined as it did not fit the requirements.
43. The Council is not at fault.

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Final decision

44. I have completed my investigation. The Council is not at fault. It correctly considered the different reliefs and applied these when appropriate.

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Investigator's decision on behalf of the Ombudsman