Summary: Mr G complains the Council wrongly refused him a Retail, Hospitality and Leisure Grant (payable to businesses impacted by COVID-19). We do not find the Council at fault for deciding another person should receive the grant. However, we do fault in the Council’s customer service which put Mr G to some unnecessary time and trouble. The Council has agreed to provide a remedy for that injustice, which we detail at the end of this statement.

The complaint

1. We have received a complaint made on behalf of ‘Mr G’. He complains the Council wrongly refused him a Retail, Hospitality and Leisure grant for a business of which he was the leaseholder on 11 March 2020. Mr G says this meant he had liability to pay business rates on that day and so had a qualifying entitlement for the grant. It was only after 11 March the Council amended its record, instead making ‘Mr H’, liable for business rates. Mr G says the Council was wrong to do this as Mr H was a self-employed manager of the business and so had no liability to pay business rates.
2. Mr G says he has significant debts arising from the subsequent closure of his business. The grant would have helped reduce these.

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The Ombudsman’s role and powers

3. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. 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)
5. This complaint involves events that occurred during the COVID-19 pandemic. The Government introduced a range of new and frequently updated rules and guidance during this time. We can consider whether the Council followed the relevant legislation, guidance and our published “Good Administrative Practice during the response to Covid-19”.
6. If we are satisfied with a council’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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How I considered this complaint

7. Before issuing this decision statement I considered:

• The written complaint to the Ombudsman made on behalf of Mr G and information gathered from his representative in a telephone call.
• Correspondence exchanged between Mr G to the Council pre-dating this investigation.
• Information provided by the Council in response to enquiries.
• Relevant law and guidance as referred to in the text below.

8. I also sent both Mr G’s representative and the Council a copy of a draft decision statement setting out my proposed findings. I considered any comments made in response to the draft before completing my investigation.

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What I found

Retail, Hospitality and Leisure Grants

9. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small businesses. Relevant to this complaint it created Retail, Hospitality and Leisure grants (RHL grants) targeted at those sectors.
10. Government guidance said local authorities should pay the RHL grant to “the person who according to the billing authority’s records was the ratepayer in respect of the hereditament on 11 March 2020”. But it also advised the authority could withhold funding if it had “reason to believe the information that they hold about the ratepayer on 11 March is inaccurate”. It also advised the Council could take steps to identify the correct ratepayer. (Grant Funding Schemes – Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund: Guidance for Local Authorities, March 2020 paragraphs 32 and 33)

Key facts

11. On 11 March 2020 the Council’s records showed Mr G was the ratepayer for the business premises (hereditament) at the centre of this complaint. It is not in dispute the business was of a kind that qualified for support under the RHL grant scheme.
12. Around two weeks later the Council received contact from Mr H. He said he had taken over the business from 4 March 2020. He said he had debts because of COVID-19 trading restrictions. He asked the Council to pay him a RHL grant.
13. Around a week later the Council received a request from Mr G asking that it pay him the RHL grant for the business. Mr G remained the leaseholder of the premises.
14. The Council took steps to identify the correct ratepayer. Mr H told the Council he sublet the business from Mr G. He provided various pieces of documentation in support of this account including:

• invoices sent to Mr G where he asked Mr H to send him money equivalent to that taken by the business in card payments; Mr H did this as he said the point-of-sale machine remained in Mr G’s name. Mr H’s invoices showed deductions for rent;
• records of Mr G paying those invoices;
• a record of Mr G offsetting a payment for one of those invoices against the value of stock in the business, for which he invoiced Mr H;
• an email from a solicitor acting for Mr G which discussed Mr H “taking over the lease” of the business premises from Mr G.

15. The Council also received information from a third party which supported Mr H’s account of his relations with Mr G.
16. In June 2020, the Council consulted with an adviser who works for the IRRV (Institute of Revenues, Rating and Valuation). They advised the Council that if satisfied Mr H sublet the premises from Mr G then Mr H was liable for the business rates.
17. Consequently, in mid-June 2020 the Council amended its records to show Mr H liable for business rates on the premises from 4 March 2020. It accepted his application for a RHL grant and refused that of Mr G.
18. By this time Mr G had complained to the Council as he had received no reply to his request for the RHL grant and had chased a reply to no effect. The Council sent its response on 18 June (so around 10 weeks after Mr G applied). It said: “As I am sure you are aware this has been a rather complicated matter that has required investigation as to the rightful recipient [of the RHL grant] [….] we have found that while you held a lease for the premises you were no longer in occupation, operating or running [the business]. Our records show that on 11 March you had sublet [the business] to [Mr H]”.
19. On 23 June Mr G escalated his complaint to Stage Two of the Council’s procedure. He said:

• “I contracted the management of the [business] out to [Mr H] – he was contracted as a self-employed manager who was paid on a performance related basis (a percentage of the weekly takings);
• [Mr H] invoiced [the business] and the business I ran then paid him for the management services;
• there was a clear meeting of minds - he managed the site for me on a cut of the weekly takings this is very common in the […] trade;
• it remains the case that on the qualifying date I held the lease (and could not sublet […])”.

20. The Council replied to Mr G’s complaint on 24 July 2020. It said Mr G had not provided any new information that would lead it to come to a different view on the decisions it had made.

Findings

21. Mr G complains at the non-payment of the RHL grant. As I have explained above the entitlement to a RHL grant flows from the liability to pay business rates on 11 March 2020. In this case the Council retrospectively amended its records to make Mr H the liable person to pay business rates from 4 March 2020.
22. I am satisfied that in principle the Council could take such a decision. Government guidance said that if the Council learnt its record of who was liable to pay rates on 11 March was inaccurate it could amend that. So, the issue at the crux of this complaint is whether the Council’s view that its record was inaccurate on that date, in respect of this business, was one taken with fault.
23. I do not find evidence of such fault. First, I find the Council only took relevant information into account in reaching its decision. I set out above that the Council received information from more than one source which led it to believe Mr G had sublet the business to Mr H. I have paid particular attention to the invoices sent by Mr H to Mr G. These do not ask Mr G to pay him a commission based on sales. Instead, they contain a deduction clearly marked as being for Mr H’s rent. There is no sign Mr G queried this method of invoicing and Mr H produced evidence showing Mr G paid him accordingly. I also note the evidence showing Mr G invoiced Mr H for stock which would appear consistent with a subletting arrangement. As did the text Mr H provided from Mr G’s solicitor.
24. Second, I do not find the Council overlooked any evidence which may have pointed to a different conclusion. I have seen no records the Council held which would support Mr G’s account that Mr H worked as a manager of the business. For example, a contract between the two setting out such an arrangement.
25. Third, I find the Council properly took expert advice to decide who was liable to pay the business rates on 11 March 2020.
26. It follows from the above that I find no fault in the Council’s view that its record of the ratepayer, on 11 March 2020, was inaccurate. In accord with government guidance it could choose to therefore pay the RHL grant to Mr H and not Mr G.
27. However, I do have some concerns about the Council’s communications with Mr G. I cannot see that before it decided the matter of liability it approached Mr G for more information on his business relationship with Mr H. I reiterate I have seen nothing which leads me to think the Council could not or should not have amended liability the way it did. But good administrative practice would have been for the Council to have explored that relationship from both sides. It took nearly three months to decide who should receive the RHL grant. So, it had time to explore with Mr G the evidence it received which led it to decide he sublet the business to Mr H. It did not do this. Nor did it keep in touch with Mr G while he waited many weeks to find out if the Council would pay him a RHL grant. This was poor customer service and justifies a finding of fault.
28. There was also poor customer service in the Council’s handling of Mr G’s complaint. It failed to answer his Stage Two complaint in the time it promises on its website (20 working days). While the delay was not extreme (it answered after 23 working days) the response to Mr G’s complaint was inadequate. Mr G provided an account of why he believed the Council had misunderstood his business relationship with Mr H. The Council should have engaged with that and explained why it disagreed. It should have told Mr G about the evidence leading it to believe he sublet his business to Mr H. This too was fault.
29. These faults caused Mr G injustice. He was put to unnecessary time and trouble in pursuing his enquiry and complaint.

Agreed action

30. The Council accepts these findings. To remedy the injustice set out in paragraph 29 it has agreed that within 20 working days of this decision it will apologise to Mr G and pay him a remedy of £100.

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Final decision

31. For reasons set out above I uphold this complaint finding fault by the Council causing injustice to Mr G. The Council has agreed actions that I consider will provide a fair remedy for that injustice. Consequently, I can complete my investigation.

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Investigator's decision on behalf of the Ombudsman