Summary: We have discontinued our investigation into Mrs C’s complaint about the way the Council dealt with her business rates account. This is because, the courts decided she owes the rates. So we will not investigate further.

The complaint

1. Mrs C complains about the way the Council dealt with her business rates account. She says the Council:

• awarded Company 1 retail relief and continued to award this, despite Government guidance changing which made her ineligible;
• awarded this retail relief to Company 1 and told her she did not need to reapply for this for Company 2; and
• asked her to repay this debt and wrongly added the debt from Company 1 to Company 2.

2. Mrs C says this has caused her distress and Company 2 financial difficulty.

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The Ombudsman’s role and powers

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)
4. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We provide a free service but must use public money carefully. We may decide not to start or continue with an investigation if we are satisfied with the actions an organisation has taken or proposes to take. (Local Government Act 1974, section 24A(7), as amended)
5. The Local Government Act 1974 sets out our powers but also imposes restrictions on what we can investigate.
6. It is our decision whether to start, and when to end an investigation into something the law allows us to investigate. (Local Government Act 1974, sections 24A(6) and 34B(8), as amended)
7. 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)

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How I considered this complaint

8. I have considered the information Mrs C and the Council provided.
9. Mrs C and the Council had the opportunity to comment on my draft decision. I considered these comments before making a final decision.

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What I found

Legislation and guidance

COVID-19 business support grants

10. Beginning in March 2020, the Government created schemes for councils to pay grants to small businesses and retail, hospitality and leisure businesses. This was because the COVID-19 restrictions affected so many of them.
11. The Government later introduced the local restrictions support grant to help businesses required to close from November 2020 due to COVID-19. Eligible businesses were those mandated to close by the Government and included non-essential retail, leisure, personal care, sports facilities, and hospitality businesses.

Discretionary relief

12. The Local Government Finance Act 1988 Section 47 (7) says you can only backdate a discretionary relief if an application is received within six months of the end of the financial year in question

Summary of key events

13. This complaint involves two estate agencies, which I refer to as Company 1 and Company 2. Mrs C is a director of both companies.
14. Mrs C applied, on behalf of Company 1, for a business rates relief due to COVID-19. At this time, estate agencies, were eligible for this relief.
15. Company 1 continued to receive this relief into the following tax year, despite estate agencies becoming ineligible due to updated Government guidance.
16. In September 2021, Company 1 was dissolved, and Company 2 took over the rates liability.
17. In July 2022, Mrs C told the Council that Company 1 was now trading as Company 2 and noted the Council was still using the name of Company 1. The Council did not update Mrs C’s business rates account with this information.
18. In April 2024, the Council wrote to Mrs C, to say the business rate relief had been awarded in error. The Council also questioned which company it should be charging.
19. In response, Mrs C confirmed again that she was trading in the name of Company 2. The Council closed the rates for Company 1, with effect from September 2021, as the company then ceased to exist. The Council then charged Company 2 the rates, meaning that it now owned the arrears of rates from the 2021/22 and 2023/24 tax years, as well as the 2024/25 rates.
20. Mrs C complained the Council should not pursue her and Company 2 for the debt, as this was a debt from Company 1, which ceased to exist.
21. The Council began its debt recovery procedures and issued a summons.
22. Mrs C said she did not wish to go to court for the court to take action on Company 2. So, she agreed to a payment plan to repay this debt to the Council. This agreement to the payment plan meant the court made a liability order in the name of Company 2 for the debt.

Analysis

23. Mrs C’s point of view is that the Council transferred the debt owed by Company 1 to Company 2. However, matters are more complicated than this.
24. The Council’s view is there was no COVID-19 grant recovery, as the award had been to a legal entity, Company 1, and a different legal entity, Company 2 now owned the rates. It was too late for Company 2 to apply for the relief as the law says you can only backdate a discretionary relief if an application is received within six months of the end of the financial year.
25. Mrs C told the Council of the change from Company 1 to Company 2 in July 2022, but the Council failed to update its system to reflect this change. If the Council had acted on this information, and changed the liability, it is unclear if this situation would have been different for Mrs C and Company 2.
26. Company 2 may have been able to apply for backdated relief for the 2020/21 tax year, as this was less than six months from the end of the financial year. This would have resulted in Company 2 having to pay more rates, but less arrears.
27. Mrs C had the opportunity to go to court, to argue her case, when the Council issued a summons, but she chose not to. It would have been reasonable for Mrs C to dispute liability through this process. The courts issued a liability order and so decided Company 2 is liable.
28. I am choosing not to investigate this complaint as the court was the most appropriate place to decide on what Mrs C must pay. The courts also consider claims for any associated costs. We can only recommend remedies for injustice caused by faults. So, the court is better placed than us to reach a meaningful outcome.

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Final decision

29. I have discontinued my investigation.

Investigator’s final decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman