Small businesses across the Highlands and Islands hope they may benefit from a decision by the Ombudsman that a couple were unreasonably charged water rates for a building which has no water.

Scottish Water's company Business Stream, which deals with commercial customers, has been told to apologise to the complainants "Mr and Mrs C ", which it has done. But insists no precedent has been set for others.

The building or workshop in Mr and Mrs C's garden was classified as commercial property with a rateable value, because they use it for their small business, which is understood to be in the Western Isles.

Despite having no water supply, they have been charged non-domestic water and sewerage rates.

They had contended they already paid for their water through the council tax bill for their house.

But Scottish Water had argued that, as Mr and Mrs C use the bathroom and make tea in their home when conducting business from their outbuilding, so water was being used for commercial purposes.

But in his report Jim Martin, Scottish Public Services Ombudsman says: "I consider this point to be debatable. "

He explains "In Mr and Mrs C's case, the Premises has no water supply, no sinks or toilets, and no water meter. It is a separate property from the dwelling house with its own RV. I do not consider it appropriate for Scottish Water to link the Premises to the dwelling house, just because it is located in the garden."

His report also underlines that Mr and Mrs C's customers do not have access to the toilet or water supply in their house.

He observed how two conflicting interpretations of Mr and Mrs C's situation had combined to work against them. On the one hand the building had a rateable value as so they had to pay commercial rates, while it was regarded as being part of their house when it came to water charges.

Mr Martin concludes "I do not consider Business Stream's charges

to have been made in line with water industry rules. I, therefore, uphold this complaint."

It is not yet clear whether the decision is likely to have ramifications across the Highlands where many outbuildings are used for a range of business purposes from art galleries to sheds.

One Ross-shire builder, who preferred not to be named said "I am delighted to hear this news and hope it might help me. I have been fighting Scottish Water for months because they are trying to charge for my shed where I store all my stuff. It has no tap and no loo, and the only water is the rain falling into the gutters and downpipes. They seem to think I should be paying for that."

Black Isle councillor David Alston, who is deputy leader of the Highland Council, said "A local tradesmen has been in exactly the same position and we have been trying to get Business Stream to review his case. But it has been so difficult getting anywhere with them. This should apply to those in similar situations"

But a spokesman for Business Stream said "This is a single decision around a specific complaint, no precedent will be set as a result. If a property has a rateable value and pays business rates, it will be liable for charges. All premises in Scotland, domestic and non-domestic, pay a common surface water and drainage charge, whether or not they have a water supply. That helps with pumping away surface water, treating it and maintaining the public network. "

However a spokesman for Scottish Water said: "Scottish Water does not charge when services are not provided. We apologise for the length of time it took to resolve this matter and would add that, once escalated, we immediately removed charges. Scottish Water is currently undertaking an overall review of charging and we will meet with the Ombudsman in the New Year to explain the wider context of water charging in Scotland."