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Horsham District Council (20 006 238)

Category : Benefits and tax > COVID-19

Decision : Upheld

Decision date : 28 May 2021

The Ombudsman's final decision:

Summary: Ms X complains about the Council’s refusal to award her business rates relief and a business grant, causing her financial difficulties and distress. She is also unhappy it issued a summons in error. We do not intend to investigate matters that have not yet completed the Council’s complaints process. We find no fault in the Council’s decision making on rates relief and a grant. However, we find the Council at fault as it issued a reminder notice in error. We are satisfied with the action it has already taken to remedy this.

The complaint

  1. Ms X complains the Council:
    • was wrong to refuse her business rates relief and a business grant. She says it provided rates relief and grants to similar businesses, but not her own;
    • issued her a summons to pay business rates despite agreeing to place this account on hold;
    • made insulting comments to her;
    • has not told her if or when it will seek payment of business rates.
  2. Ms X says the Council’s actions have worsened her business’ financial difficulties and caused her extreme stress and distress.

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What I have investigated

  1. I have investigated the first two points of Ms X’s complaint above. At the end of this decision I have set out why I have not investigated other matters.

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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. The law says we cannot normally investigate a complaint unless we are satisfied the council knows about the complaint and has had an opportunity to investigate and reply. However, we may decide to investigate if we consider it would be unreasonable to notify the council of the complaint and give it an opportunity to investigate and reply (Local Government Act 1974, section 26(5))
  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 spoke to Ms X and I reviewed documents provided by Ms X and the Council.
  2. I gave Ms X and the Council the opportunity to comment on a draft of this decision. I considered their comments before making a final decision.

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What I found

Grant Funding Schemes

  1. In response to the COVID-19 pandemic the Government introduced two grant schemes to support businesses. In March 2020 the Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes”.
  2. Businesses which, on 11 March 2020, were eligible for Small Business Rates Relief (“SBRR”) could be eligible a Small Business Grant (“SB Grant”) of £10,000.
  3. Businesses which, on 11 March 2020, were eligible for retail rates relief, known as the Expanded Retail Discount, could be eligible for a Retail, Hospitality and Leisure Grant (“RHL Grant”) grant of up to £25,000.

Expanded Retail Discount (the “Discount”)

  1. In 2020 the Government increased the availability of the business rates retail discount in response to the COVID-19 pandemic. In April 2020 it published guidance for councils on how to apply this discount; “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance”.
  2. Each council was to adopt its own scheme and decide whether to grant the Discount, having regard to the guidance.
  3. The Discount applied to businesses used wholly or mainly:
    • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues;
    • for assembly and leisure; or
    • as hotels, guest & boarding premises and self-catering accommodation.
  4. Shops, restaurants and cafes were further defined as properties used for the sale of goods, supply of services, or sale of food or drink, to visiting members of the public.
  5. The guidance listed the types of business included under each definition. However, this was a guide only and it was for councils to decide if a business was broadly similar in nature to those listed and so eligible.
  6. The guidance also listed the types of business not included. However, it explained this was a guide only and it was for a council to decide if a business was broadly similar in nature.

Council’s scheme on the Discount

  1. The Council decided to adopt and apply the Government guidance on the Discount.

What happened

  1. Ms X’s business provides an event service to members of the public. She says clients visit the business premises to discuss events planning, view displays and taste samples.
  2. Ms X and the Council have provided copies of correspondence exchanged between them. I have referred to key information below.
  3. In April 2020 Ms X applied to the Council for a business grant.
  4. By email of 29 April, the Council issued a decision, refusing a grant. The Council explained Ms X was not entitled to a RHL grant as the business was not used for retail purposes as defined in the Government guidance on the Discount. It provided a weblink to the relevant guidance. The Council said there was no right of appeal but Ms X could ask for a review of its decision if she had further information or if there was an error in its interpretation of her application. In a further email the Council suggested Ms X send photographs confirming the public areas of the premises and anything else she could provide to demonstrate she had visiting members of the public.
  5. Ms X sent further correspondence and supporting evidence to the Council. She said it had incorrectly assumed her business was not for the public or part of the hospitality sector. But it was a hospitality setting. She enclosed testimonials from previous clients and extracts from her website. She explained how the site was used for displays and tasting, enclosing images of the tasting rooms. She said the business was very much part of the hospitality industry, and access to the building was key to clients. She provided client references, case studies and a mood board demonstrating how clients visited the business to view displays and taste samples.
  6. In its response, dated 4 May, the Council explained those businesses eligible for SBRR may also be eligible for an SB grant. However, Ms X’s business did not qualify for SBRR as it had a rateable value over £15,000. Further, those businesses eligible for the Discount may also be eligible for the RHL Grant. However, on the information provided it found the primary use of the property was for the preparation and planning of food and hospitality for catering events. And the public visiting the premises was not the whole or main function of the property. It considered her business did not fall within the guidance for the Discount or associated RHL Grant.
  7. Ms X then told the Council some clients collected food hampers from the premises for informal gatherings, like a takeaway. She had evidence of the hamper service and referred to images and testimonials.
  8. The Council responded further. It said it did not doubt members of the public visited the premises, however, its use was not wholly or mainly that of a shop; that being a place where its main purpose was for members of the public to attend to purchase goods. It therefore fell outside the scope of the Discount and so was not eligible for the associated RHL Grant.
  9. Ms X detailed her business further for the Council to consider. She compared the tasting service to a restaurant visit; it was not a workshop environment. She also hoped it would be able to offer support through the upcoming discretionary funding.
  10. By email of 29 May, the Council confirmed its decision on the grant schemes remained the same.
  11. Ms X then complained the Council had previously told her she would receive funding and asked for bank details. It had then refused funding. She said other councils had given funds to similar businesses. And her business was not a lock up. She sent further correspondence repeating previous points and that she expected the Council to honour its original phone call where it told her she would receive a grant.
  12. In its response of 16 June, the Council explained it made verification calls to applicants to ensure they were the legitimate business owner and to confirm bank details. It did not record these calls and so could not confirm what was said. However, it apologised if she was incorrectly told she would receive a grant. The Council confirmed she was ineligible for the SB Grant because the rateable value was over the £15,000 threshold. It again explained that to qualify for a RHL Grant a business must be eligible for the Discount as per the Government guidance. It had refused the RHL Grant because her business did not fit the definition of retail, leisure and hospitality as laid out in the Government guidance.
  13. The Council further noted the VOA recorded her property as ‘Catering Building and Premises’ and not as a ‘lock-up’. It understood she ran a high-end quality catering service from the premises. In addition, she provided a tasting service as part of the booking process and a collection service for the hamper service. It referred to the Government guidance on shops used for the sale of goods to visiting members of the public and the list of businesses included in this definition. The list did not include properties used for catering or collection. It explained it had discretion if the use of the property was wholly or mainly being used for similar purposes. But it found her business was not wholly or mainly used to sell goods to visiting members of the public. Rather the substantial use of the premises was catering for external events or the collection of hampers.
  14. Ms X disputed the Council’s decision. She outlined the financial difficulties faced by her business and the lack of Government support for the events industry. She felt at the very least there was a need for a suspension of business rates and discretionary funding.
  15. I note the Council awarded Ms X £10,000 under its discretionary funding scheme.
  16. By email of 6 August, the Council told Ms X its decision not to award a RHL grant was linked to its decision that she was not entitled to business rates relief under the Expanded Retail Discount Scheme. It confirmed it had placed a hold on her business rates account until the end of December 2020 and set a review date for early in 2021 so it could contact her to discuss further. It had paid her the maximum award under its discretionary grant scheme and given her details of its hardship relief fund. Ms X could contact the Ombudsman if she remained unhappy.
  17. The Council has provided a chronology of contacts with Ms X. This says on 17 September Ms X contacted the Council as it had sent her a business rates reminder in error. And, that a Council officer called Ms X back to apologise for the mistake.
  18. Ms X contacted the Ombudsman. In summary she said:
    • The Council told her by phone she would receive a grant but then sent a letter refusing it.
    • She spent many months in correspondence with the Council trying to correct its misunderstanding of her business model.
    • The Council told her that her business only looked after the rich, which she found insulting.
    • The Council said the discretionary grant was principally aimed at supporting smaller businesses that had lost their only source of income. However, she too had lost her only source of income. This was hugely insulting.
    • Other businesses on the same estate received the full 25K grant based on the rateable value of their business.
    • She asked the Council to cancel her business rates for the year April 2020-21. After much correspondence the Council put payment on hold, but it could still ask her to pay the full rates.
    • The Council recently sent her a summons seeking payment for the whole year. After her contact it confirmed this was an error, but this caused her more stress.
    • Other businesses on the same industrial estate have received rates relief and she does not understand why her business has been treated differently.
    • Other councils have given the grant to businesses similar to hers.
  19. When I spoke to Ms X she did not want to provide the names of any businesses in the same council area that she felt were treated differently. She was also concerned about whether and when the Council would remove the suspension on her payment of business rates.
  20. In response to enquiries the Council added:
    • It carried out an initial ‘anti-fraud’ check for all grant applications to ensure the application was submitted by that business. It would have been this part of the process where it told Ms X she was successful.
    • It placed the recovery of Business Rates on hold while Ms X exercised her right to complain but has told her the rates are due and payable.
    • A similar neighbouring business had a lower RV and so met the requirements for an SB Grant.
    • It was previously unaware of Ms X’s complaint that she received insulting comments from a member of staff. It will investigate this should Ms X provide further information on who she spoke to and when.
  21. In comments on earlier drafts of this decision Ms X said:
    • She has built up her business over 30 years and made a lot of sacrifices in doing so. She has also paid her rates to the Council over this time. In the circumstances she feels the Council should act reasonably and provide her with a grant.
    • She does not consider the Council’s view of her premises accurately reflects reality.
    • The premises has four key areas essential to her business; the kitchen, office, showroom and tasting room. She could not offer a bespoke service to clients without them visiting her premises. Additionally, financial transactions regularly take place on her premises.
    • Other councils have provided grants and rates relief to similar businesses.
    • The Council has not told her that business rates are due, despite its enquiry response suggesting it had.
    • The Council did not formally apologise for issuing a summons in error. She was extremely shocked and distressed on receiving this given she had no income or means to pay it. Although the Council withdrew the summons she was left with great unease.
    • The lack of a definitive position on business rates has added to her worry.
    • She has experienced further difficulties in recent communications with the Council.
    • She is concerned the Council will treat her unfairly as a result of her raising a complaint to the Ombudsman.
    • The Council did not visit her premises, despite her offers.
    • The Council’s lack of understanding of her business and its rigid mindset means it has not changed its view despite all the information she has provided.
    • Given the critical retail component of her business (visits from the public to select services) she believes the basis for the Council’s decision was flawed from the outset. She has provided substantial written evidence to demonstrate the retail aspect of her business from a variety of customers who have used her services but this does not appeared to have been factored into the decision.
    • She moved to her current premises specifically because the previous premises could not support the volume of retail customers who visited.
  22. In response to a draft of this decision the Council confirmed it issued a reminder notice rather than a summons in error. Further, that it had already provided a written apology for this.
  23. The Council provided a copy of a reminder notice dated 11 September 2020 and a copy of an email dated 16 September 2020 in which it apologised to Ms X.

Findings

  1. I cannot question whether the Council’s decision is right or wrong simply because Ms X disagrees with it. It is not within my role or remit to review the information and evidence Ms X gave the Council and then reach my own conclusions on the nature of her business. I cannot replace the Council’s judgement with my own. Rather, I can investigate whether the Council followed a proper decision making process; that is whether it took account of all relevant information and reached a decision in line with relevant law, policy and guidance.
  2. The Council found Ms X’s business had a rateable value above the threshold for SBRR and so was not eligible for an SB Grant. I am satisfied the Council refused this grant in line with relevant law and Government guidance.
  3. The Council had to consider if Ms X’s business was one of those eligible for the Discount and if so, it could consider eligibility for the RHL Grant. On review of the documents provided I am satisfied the Council considered all the information Ms X provided and applied the Government guidance before deciding her business was not eligible for the Discount and so not eligible for an RHL Grant. I am satisfied the Council followed a proper decision making process.
  4. I appreciate Ms X disagrees with the Council’s decision. She considers her business premises are wholly or mainly used as a shop, restaurant or takeaway. However, the Council disagrees. It considers her premises are mainly used for catering or collection, rather than selling goods to visiting members of the public. This is the Council’s judgement. It reached this decision having properly considered relevant evidence alongside the Government guidance. Therefore, I cannot question or challenge this. The Council followed a proper decision making process and so I do not find fault.
  5. I note Ms X would have liked the Council to visit her business before reaching a decision. However, the Council was not obliged to do so.
  6. It is up to each council how they apply and interpret the Government guidance so other councils may reach different decisions on what appear to be similar businesses. This is not evidence of fault.
  7. The Council has referred to one neighbouring business, with a similar set up to Ms X, but that business had a lower rateable value and so received SBRR and a SB Grant. I therefore find this is not evidence of inconsistent decision making by the Council.
  8. I note Ms X is unhappy neighbouring businesses received rates relief and grants whereas she did not. However, I have not seen any evidence to suggest these businesses were identical to Ms X’s business. I have also not seen any evidence the Council has had opportunity to investigate and respond to any specific complaints of inconsistency. Further, I have found no fault in how the Council decided in Ms X’s case. Bearing these points in mind, I consider it would not be appropriate for me to investigate the Council’s decisions on other businesses.
  9. I acknowledge Ms X’s business has been closed for a year now, she has suffered a huge loss of income and she is facing financial difficulties. I also acknowledge her feelings of unfairness given apparently similar businesses in different council areas may have received rates relief and a grant, whereas her business has not. However, I can only consider whether the Council made its decision properly, taking into account relevant information, law, guidance and policy. I cannot find fault on the grounds the situation is unfair.
  10. The Council agreed to suspend Ms X’s business rates account until early 2021, though it was not obliged to do so. The Council accepts it then sent a reminder notice to Ms X in error. This was fault. The Council says it accepted its error and apologised. I note Ms X denies receiving an apology, however I am satisfied on the evidence the Council issued a written apology. I recognise Ms X would have been very distressed on receipt of the notice, however bearing in mind the Council promptly accepted the error, I consider its offer of an apology was appropriate. I am satisfied with the actions taken by the Council and therefore I make no recommendations.
  11. Ms X says the Council told her she would receive a grant however the Council has no record of this call and has provided an alternative explanation of what was said. Given the differing accounts and in the absence of supporting evidence, I cannot make a finding, even on the balance of probabilities, on whether the Council was at fault in this regard.

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Final decision

  1. I find no fault in the Council’s decision to refuse Ms X rates relief or a business grant. I find the Council at fault for sending a business rates reminder notice in error however I am satisfied with the action already taken by the Council to remedy this.

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Parts of the complaint that I did not investigate

  1. I have not investigated Ms X’s complaints that Council staff made insulting comments to her as I consider it reasonable to allow the Council the opportunity to investigate and respond.
  2. I have not investigated Ms X’s complaints that the Council has not told her if or when it will seek payment of her business rates, as I consider Ms X should first raise this with the Council and allow it the opportunity to respond.
  3. I have not investigated any recent matters raised in Ms X’s comments on a draft of this decision. This is because I consider it reasonable to allow the Council the opportunity to investigate and respond.

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Investigator's decision on behalf of the Ombudsman

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