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Bury Metropolitan Borough Council (20 004 454)

Category : Benefits and tax > COVID-19

Decision : Not upheld

Decision date : 01 Jun 2021

The Ombudsman's final decision:

Summary: Mr X complained the Council decided his business was not eligible for retail rates relief, which meant it did not qualify for a Retail Hospitality and Leisure grant. There was no fault in the way the Council considered this.

The complaint

  1. Mr X complained about the Council’s refusal of a Retail Hospitality and Leisure (RHL) grant to support his business during the COVID-19 pandemic. He said the Council decided his business premises did not qualify for the Expanded Retail Discount Scheme (ERDS), although it had previously agreed to the business rates retail discount scheme in 2019-2020, based on the same business use.
  2. Mr X said the refusal of the grant added to the financial difficulties caused by the COVID-19 pandemic.

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The Ombudsman’s role and powers

  1. 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)
  2. 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)
  3. 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”.
  4. 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

  1. I considered:
    • The information Mr X provided and spoke to him about his complaint;
    • The information the Council provided in response to our enquiries; and
    • Relevant law and guidance, as set out below.
  2. Mr X and the Council had an opportunity to comment on my draft decision and I considered their comments before making a final decision.

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What I found

Relevant law and guidance

Business grants

  1. In response to the COVID-19 pandemic the Government introduced two grant schemes to support businesses. The Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes” (March 2020).
  2. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000. Eligibility for SBRR is subject to s43 of the Local Government Finance Act 1988. This says the rate applies to occupied businesses.
  3. Businesses which, on 11 March 2020, would have received the Expanded Retail Discount, were eligible for a Retail, Hospitality and Leisure Grant (RHL Grant) of up to £25,000.

Expanded Retail Discount

  1. The Government extended business rates relief to retail, hospitality and leisure sectors under the Expanded Retail Discount Scheme (ERDS). It published Guidance for councils; “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance” (April 2020). This says each council will adopt its own scheme and decide whether to grant the ERDS discount, having regard to the guidance.
  2. The guidance says properties that are wholly or mainly used as shops will benefit. A “shop” is a premises wholly or mainly used to sell goods to visiting members of the public.
  3. The guidance lists the types of shops included, however it says this is a guide only and it is for councils to decide if a business is broadly similar in nature to those listed and so eligible.
  4. The Council decided to award the expanded retail discount in line with published Government guidelines.

What happened

  1. Mr X operates a business across two commercial units, A and B. Unit A is the primary unit, was open to the public and the Council awarded a Retail, Hospitality and Leisure (RHL) grant for that unit. The grant application complained about relates to unit B.
  2. Council records show unit B was empty for the first part of 2019-2020. In December 2019, Mr X told the Council unit B was used for retail between June and September 2019. After some correspondence, the Council accepted this, although it was not able to inspect the building to confirm this due to the delay in Mr X informing it of the changes. Accordingly, it charged occupied rates and applied a retail discount retrospectively. The Council recorded unit B as empty from early October 2019.
  3. In early March, Mr X told the Council he planned to use unit B for a new retail purpose but the unit was currently being used for storage, to support unit A, which was next door. Council records show it decided to carry out an inspection but it was not able to do so until mid June 2020 as a result of the COVID-19 pandemic.
  4. In the meantime, Mr X had applied for a RHL Grant. The Council told Mr X in early May that the business was not eligible for a RHL grant for unit B because the unit was listed as unoccupied. It said if the unit was occupied, Mr X would need to confirm the date it was occupied from and provide evidence of this.
  5. The record of the June inspection shows unit B was shuttered at the time, although the officer was able to take some photos through the openings in the shutters. The inspection confirmed unit B was being used for storage and some refurbishment was being carried out. At that stage, unit B was not open to the public due to COVID-19 restrictions.
  6. The Council told Mr X it had carried out an inspection, which had confirmed unit B was in use. It asked Mr X to tell it the date he began to use unit B for storage and the date refurbishment works started. It set out the criteria for the Expanded Retail Discount Scheme (the ERDS discount) and said those business that were eligible for the ERDS discount would get the RHL grant.
  7. In response, Mr X told the Council he had started restocking unit B in early January 2020 and the refurbishments had started in October 2019. The Council amended its records to show unit B was occupied from early January 2020. In light of this, Mr X asked the Council to progress the RHL grant application.
  8. The Council considered the application further. In July, it said unit B was not eligible for the ERDS discount because it was being used mainly as a storage facility. However, it agreed to refer the case for a review.
  9. In September, as part of the review process, the Council decided to carry out another inspection to confirm whether the refurbishments had been completed and whether unit B was now open to the public. A few days later, Mr X told the Council he had stopped trading and would be renting unit B. The Council inspection in mid October confirmed unit B was empty and shuttered, with a “For Let” sign, marked as “Under offer”.
  10. The Council issued its review decision in late October. It said it was satisfied the original decision to refuse was correct, and that Government guidance had been correctly interpreted and applied. It explained that to qualify for the ERDS discount the premises must be wholly or mainly used for the sale of goods (or provision of services) to visiting members of the public. It also said:
    • Mr X’s emails said unit B was mainly used for storage, although it accepted due to the nature of the business storage and display amounted to the same thing;
    • Mr X indicated unit B was not heated and lights were only used when staff took customers through, which accounted for the low utility bills;
    • Mr X had told it he had knocked through between the two units during the national lockdown to make it easier for staff to take customers to unit B, which suggested it was not really accessible before.
  11. In response to my enquiries, the Council said:
    • It had agreed the retail discount in 2019-2020, in good faith, and applied it retrospectively but had not been able to check unit B was eligible as it was not told about the occupation at the time;
    • Unit B was listed as being a shop and display room but when considering whether the ERDS discount applied it had to consider the actual use, which was mainly storage rather than retail. It said Mr X had provided no evidence to show unit B was used for the sale of goods to visiting members of the public from January 2020 onwards and specifically as at 11 March 2020, which was the relevant date for the purposes of RHL grants; and
    • It noted that reburbishments began in October 2019 and were still ongoing when it inspected in June 2020, which would have prevented visiting members of the public from accessing it on health and safety grounds.
  12. In his comments on my draft decision, Mr X disputed the refurbishments were ongoing. He said work stopped in December 2019 for financial reasons and the only work after that was the installation of some lighting. He provided two photographs that he said he sent to the Council in June 2020, which show rolls of carpets with price labels. He said if carpet was being stored it would not be priced and would be rolled differently so the colour and pattern would not be visible. He also said the unit was used by customers to view carpets just as frequently as the main unit. I have not seen evidence he explained this to the Council when challenging its decision.

My findings

  1. I cannot question whether the Council’s decision is right or wrong simply because Mr X disagrees with it. I must consider whether there was fault in the way the decision was reached.
  2. To be eligible for a RHL grant, a business first had to qualify for the ERDS discount. The ERDS discount is available for premises that are used wholly or mainly as shops used to sell goods to visiting members of the public.
  3. When deciding whether unit B qualified, the Council took into account the information Mr B provided at the time and carried out an external inspection. Based on this, it decided unit B was mainly used for storage at the relevant time.
  4. Mr X was unhappy with the outcome and the Council reviewed its decision. It took into account the information it had about the way unit B was used, including:
    • Emails from Mr X describing the use of unit B as mainly for storage;
    • Utility bills, which showed no gas used as unit B was not heated and low electricity usage because lights were only used when staff took customers through to unit B; and
    • Mr X had knocked through between the units during lockdown to make it easier for staff to take customers into unit B, which it said suggested unit B was not really accessible in March 2020.
  5. The Council considered whether unit B was “wholly or mainly” used for retail and whether it was accessible to “visiting members of the public”. It concluded unit B was not eligible for the ERDS discount and therefore its decision to refuse the RHL grant was correct. I have not found fault with the way it considered this and therefore cannot comment on the decision reached.
  6. Mr X queried why unit B qualified for a retail discount in 2019-2020 but not in 2020-2021 and the Council explained this was because it was not, in fact, able to check the way unit B was used in 2019-2020 but agreed the discount in good faith. This accounts for the Council’s apparent change of view. The Council was not at fault.

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Final decision

  1. I have completed my investigation. I have not found fault.

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Investigator's decision on behalf of the Ombudsman

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