Summary: Mr B complains the Council wrongly refused his business a small business grant. We do not uphold the complaint, finding no fault in the Council’s decision.

The complaint

1. I have called the complainant ‘Mr B’. He complains the Council wrongly refused his business a small business grant under a scheme established by the Government in April 2020 to support businesses impacted by the COVID-19 pandemic.
2. Mr B says as a result his business missed out on a valuable source of financial help when needed.

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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. 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”.
5. 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

6. Before issuing this statement I considered:

• Mr B’s written complaint to the Ombudsman and any supporting information he provided, including that gathered in a telephone conversation with him;
• correspondence exchanged between Mr B and the Council before we began our investigation of the complaint;
• information provided by the Council in response to our written enquiries;
• relevant Government guidance as referred to below.

7. Mr B and the Council both had chance to comment on a draft version of this decision statement. Any comments received were considered before I finalised the content of this statement.

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What I found

Small Business Grant Fund

8. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small businesses. These included the Small Business Grant Fund (SBGF).
9. To receive funding from the SBGF a business had to be in receipt of small business rate relief (SBRR) (or rural rates relief) on 11 March 2020. Eligible businesses would receive a grant of £10,000. SBRR is only applied where a business occupies premises or land with a rateable value of less than £15000. It is not applied if the property or land is empty and therefore not in occupation by the ratepayer.
10. Government guidance said the Council should pay any funding from the SBGF to “the person who according to [it’s] records was the ratepayer in respect of the hereditament on the 11 March 2020”. But that where it had “reason to believe” it held incorrect information about the ratepayer it could withhold any payment and “take reasonable steps” to identify the correct ratepayer.
11. The Valuation Office Agency (VOA) provides valuations and property advice to support taxation and benefits to the government and local authorities in England, Scotland and Wales. It compiles and maintains lists detailing the rateable value of commercial properties for business rates.

Background and key facts

12. In 2016 Mr B bought an empty commercial building intending to convert it for residential use. Between March 2017 and March 2020 Mr B made a series of successful planning applications seeking permission to change the use of the building to residential and altering its appearance. However, he did not begin to put any of the permissions into effect until May 2020.
13. In between and throughout 2019 Mr B rented the building to a third party I will call ‘Mr X’. I understand the terms of the lease granted to Mr X were that he could only use the property for business and that he was the ratepayer. However, in summer 2019 Mr B learnt Mr X may have been using the property for residential purposes and informed the Council accordingly. However, the Council did not tell the Valuation Office Agency and the property remained on the rating list with Mr X remaining liable to pay business rates. The rateable value of the property was less than £15000.
14. In April 2020 Mr B contacted the Council to say Mr X no longer rented the property. Mr B said that Mr X’s lease finished at the end of December 2019 and from January 2020 Mr B’s business (a limited company) had occupied the property. The Council amended its records and made Mr B’s business liable for business rates, backdating that liability to January 2020. It also awarded SBRR. In May 2020, Mr B asked the Council to pay his business a grant from the SBGF.
15. Before the end of the month the Council refused Mr B’s request. It said that it did so because on 11 March 2020 Mr B’s business was not liable for, or receiving, SBRR. It said Mr B had not told it of the change in ratepayer until April 2020.
16. Mr B said he wanted to appeal this decision. He said his business had occupied the building on 11 March 2020 and had subsequently been made liable for the business rates and awarded SBRR. On receipt of this request the Council asked Mr B to provide more information. It wanted evidence of the business tenancy or lease agreement. It also wanted copies of the company accounts and bills for services.
17. In response Mr B sent the Council a copy of a rental agreement and the business trading accounts (both the accounts and the Companies House record give a different address for the business). The Council then wrote to Mr B asking him to also provide “evidence of occupation and trading”.
18. Mr B sent the Council further evidence in July 2020. This comprised:

• a bill from an IT supplier to Mr B’s business and addressed to it at the building’s address for “infrastructure installation and testing”;
• a bill for various car servicing and parts addressed to the business at the building’s address;
• a bill for various building/DIY products addressed to the business at the building’s address;
• two electricity bills addressed to the business for the building but sent to a different address and covering the period January to April 2020. These showed only minimal electricity usage (four units of electricity) for the time in question.

19. The Council wrote back to Mr B saying the evidence was insufficient to show that his business occupied the building. It noted the bills appeared to show ‘zero’ electricity usage and there were no invoices produced by the business. In reply Mr B said the nature of his business was not such that it invoiced clients.
20. In August 2020, the Council wrote to Mr B again. It now said that it believed on 11 March 2020 the building was undergoing renovation for residential use, noting Mr B’s most recent planning application (that made in March 2020) and photographs on the planning file. The Council removed SBRR from the bill and now treated the property as empty from the time Mr B’s business became ratepayer.
21. Mr B replied saying this was wrong and that no building work began before May 2020.
22. The Council now replied to Mr B under its complaint procedure. It repeated the explanation it gave Mr B in April 2020 for refusing his business funding from the SBGF, which I referenced at paragraph 15.
23. Mr B remained dissatisfied and escalated his complaint. He provided further evidence to show building work did not begin on the property before May 2020.
24. An officer prepared a report in response to Mr B’s complaint considered under Stage 2 of the Council’s complaint procedure. This said the Council had considered paying a grant to Mr B’s business from the SBGF. But to do so it would need proof the business occupied the building. It considered Mr B had not provided this. The Council consequently accepted the content of this report and wrote to Mr B saying that its position on his complaint remained as set out previously.

My findings

25. There is no dispute Mr B’s business became liable for business rates after Mr X vacated the building. I am also satisfied there is no need to resolve any potential discrepancy about how Mr X used the building or when work began to convert it to residential use. Because while these matters were raised during the consideration of this complaint, I do not find them critical to the Council’s decision to refuse Mr B’s business funding from the SBGF. I have therefore based my findings accepting as fact Mr X vacated the building at the end of 2019 and that no work to convert it for residential use began until May 2020.
26. I consider the critical issue in this case is therefore whether Mr B’s business occupied the building on the key date in question (11 March 2020). The Council has come to the view it did not and that consequently the building was empty. Meaning even though it initially gave Mr B’s business SBRR this was wrong. Consequently, it removed the SBRR and that meant the business had no entitlement to a grant from the SBGF.
27. My role is not to question a decision taken by the Council unless it has reached a decision with fault. In this case I am satisfied there is no fault in the Council’s decision to regard the building as unoccupied on 11 March 2020. This is because I find that decision has not overlooked anything relevant nor taken anything irrelevant into account.
28. I find the Council did not comment directly on those bills addressed to the business at the property address. Some of these may appear consistent with making it ready for occupation (the IT services invoice and building supply invoices for DIY products). But the Council could reasonably conclude these were insufficient to show occupation. It clearly placed more weight on the utility bills. I consider it could reasonably do this as these appear to show virtually zero usage for the months in question. This would appear incompatible with the building being in occupation.
29. It follows from the above that I find no fault therefore in the Council’s decision to remove SBRR and consequently to refuse Mr B’s business funding from the SBGF.
30. I considered also if there was any fault in the communications the Council had with Mr B. I found the Council’s replies to Mr B were at times confusing. It twice suggested it could not award a grant because it did not know of a change in ratepayer on 11 March until April 2020. This is something the Council later recognised was wrong as evidenced by the report that formed part of its consideration of Mr B’s complaint at Stage Two of its complaint procedure. This correctly identified the Council had discretion to pay a grant to the correct ratepayer where it learnt of the change in ratepayer after 11 March 2020 (see paragraph 10). I do not find the Council explained this to Mr B. Consequently, it did not focus its replies to his complaint on the question of occupation. Its correspondence in August also unnecessary clouded matters by suggesting Mr B had begun conversion of the building to residential use before 11 March 2020.
31. However, I do not consider these communications so poor they justify a finding of fault. Because despite some confusion I am satisfied the Council’s communications were adequate for Mr B to understand the Council needed proof his business occupied the building at the crux of this complaint. It also gave him sufficient opportunity to provide that proof.

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Final decision

32. I do not uphold this complaint. I find the Council was not at fault for declining Mr B’s business a small business grant because it was not entitled to SBRR.

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Investigator's decision on behalf of the Ombudsman