Summary: Ms D complained the Council did not award her business a Retail, Hospitality and Leisure Grant to help with the impact of COVID-19. We find fault as the Council did not properly consider statements made by Ms D in support of her request nor consider using its discretion to pay her a grant. This caused Ms D uncertainty. The Council accepts these findings and has agreed action to reconsider Ms D’s request for a grant, set out in detail at the end of this statement.

The complaint

1. I have called the complainant ‘Ms D’. She complains the Council did not award her business a Retail, Hospitality and Leisure Grant (RHL Grant) to help with the impact of COVID-19.
2. Ms D says the decision to refuse the grant caused distress given the financial hardship caused by the impact of the pandemic.

Back to top

The Ombudsman’s role and powers

3. 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)
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)

Back to top

How I considered this complaint

6. Before issuing this decision statement I considered:

• Ms D’s written complaint to the Ombudsman and any supporting information provided in emails and telephone conversation;
• information provided by the Council;
• relevant law and guidance as referred to in the text below.

7. I also gave Ms D and the Council opportunity to comment on a draft decision where I set out provisional findings. I took account of the comments made before finalising this statement.

Back to top

What I found

Retail, Hospitality & Leisure Grants

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 grants specifically targeted at retail, hospitality and leisure businesses (RHL grants).
9. To be eligible to receive a RHL grant a business first had to be eligible to receive the Expanded Retail Discount (ERD) scheme for business rates “had that scheme been in force” on 11 March 2020. Eligible businesses with a rateable value of more than £15,000 would receive a grant of £25,000.
10. Government guidance headed “Who will receive this funding?” said:

• “The person who according to the billing authority’s records was the ratepayer in respect of the hereditament on the 11 March 2020” (the term hereditament refers to any rateable property and/or land).
• “where the Local Authority has reason to believe the information they hold about the ratepayer on the 11 March is inaccurate they may withhold or recover the grant and take reasonable steps to identify the correct ratepayer.” (see Grant Funding Schemes – Small Business Grant Fund and Retail, Hospitality & Leisure Grant Fund Guidance – paragraphs 32 to 33 version 4 in force during the events of this complaint).

11. Further government guidance discussed “Rating List Changes”. It said:

• “Any changes to the rating list (rateable value or to the hereditament) after 11 March 2020 including changes which have been backdated to this date should be ignored for the purposes of eligibility.
• Local authorities are not required to adjust, pay or recover grants where the rating list is subsequently amended retrospectively to 11 March 2020.
• In cases where it was factually clear to the Local Authority on 11 March 2020 that the rating list was inaccurate on that date, Local Authorities may withhold the grant and/or award the grant based on their view of who would have been entitled to the grant had the list been accurate.
• This is entirely at the discretion of the Local Authority and only intended to prevent manifest errors”. (see Grant Funding Schemes – Small Business Grant Fund and Retail, Hospitality & Leisure Grant Fund Guidance – as above, paragraphs 38 to 41).

Valuation Office Agency

12. 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.

Chronology

13. Ms D runs a retail business and operates out of premises, located on a High Street, which are owned by the Council. Ms D has used those premises since May 2019. Until April 2021 the premises were not described on the rating list as a ‘shop and premises’ but that changed in April 2021. The rateable value of the property has remained the same. It is more than £15,000.
14. Ms D has not contracted with the Council for rental of the premises. Instead, she entered a sub-letting arrangement with the lessee of the premises, who I will call ‘Mr E’. He has his own business.
15. Ms D’s written agreement with Mr E said Ms D would “take a section of the space” while Mr E’s business had “use of the back room and access to the garden”.
16. In July 2019, the Council visited the premises, found Ms D’s business trading and made it liable for business rates. While noting Ms D ran a retail business the Council did not inform the VOA of the change of use of the premises. Nor is there any record that it advised Ms D to do so.
17. By November 2019 the business rates account was in arrears and the Council had arranged to go to Court to obtain a liability order against Ms D’s business. At this point she contacted the Council and told it she had only just found the bills in the business name. She explained her understanding that under the terms of her agreement with Mr E, he or his business remained liable for the business rates. She also explained Mr E received all the post in premises next door, which he also leased from the Council. The premises Ms D used had no separate letterbox. The Council notes of the call says Ms D told it “the rates are wrong and the Council need to change it”. The next line, giving the Council response says: “gave her the VOA number”.
18. Ms D says around this time Mr E had also begun subletting another part of the premises she was using to a second tenant. Ms D was willing to pay the outstanding business rates but found she could not collect a contribution from the second tenant towards the bill. While throughout this time Mr E continued to use the back room of the premises for storage.
19. After a further conversation with the Council, it agreed to put a hold on collection of the outstanding rates bill. Ms D then sent an email to the Council saying her business was “not liable for all the rates […] we are sharing the property with the Landlord [i.e. Mr E] and any other party that he wishes to put in. This is a short term let for a shared space as it stands [Mr E’s business] is the main tenant they reserve the right to let out the property. [Mr E’s business] is currently in possession of half of the property.”
20. On receipt of this email the Council said it would stop charging Ms D’s business for rates. It changed the name on the account to that of Mr E (or his business). It remains in his name (or that of his business) to now.
21. Ms D says around January 2020 there were two changes affecting the premises. First, the second business vacated. Second, Mr E agreed to stop using part of the premises for storage. So, Ms D says she now had sole use of the whole premises. Ms D says that she agreed with Mr E the rates bill should reverse back to her name.
22. Ms D says she next contacted the VOA to let it know she was in sole occupation. I have seen screenprints which show Ms D was in contact with the VOA in February 2020. However, these do not show what Ms D told the VOA nor what it said in reply. Ms D has not been able to provide that detail. During this investigation, the Council says it has made its own enquiries with the VOA but it says it cannot provide that information as its correspondence was with Ms D.
23. In March 2020, following the onset of the COVID-19 pandemic and a Government announcement that it would support retail businesses, Ms D asked the Council about receiving a RHL grant. In mid-May 2020 the Council told Ms D her business was not entitled. It gave its reason as follows: “that you were not registered as in occupation on 11 March 2020 or are not a Business Rates account holder”.
24. Ms D appealed that decision later that month. She also subsequently pursued a complaint and approached her local Councillor and MP who have both made enquiries on her behalf. In that correspondence Ms D has consistently:

• explained the sequence of events as I have summarised in paragraphs 21 to 22 above;
• said she was therefore in sole occupation of the premises on 11 March;
• using those premises for retail;
• so should therefore be entitled to a RHL grant.

25. In its replies to Ms D and to us, the Council has said:

• it accepts Ms D was running a retail business from the premises on 11 March; it considers the listing of the property as something other than a shop did not prevent it considering payment of a RHL grant;
• but it finds Ms D was not the ratepayer on 11 March 2020 and it has not made her liable subsequently;
• it has no record that Ms D told it before 11 March that her business was solely occupying the premises and so should solely be liable for business rates from January 2020;
• that it “could only consider paying the grant to the business registered for payment of business rates on 11 March 2020”;
• that its records were correct and did not need updating.

26. During this investigation the Council has said that it is now prepared to review its position on Ms D’s liability to pay rates. But it wants satisfactory evidence to show Ms D’s occupation status changed around January 2020. It has suggested this could include evidence of:

• any communications Ms D had with Mr E and clarification if any new subletting agreement was signed;
• rental payments to Mr E;
• what Ms D said to the VOA in February 2020.

27. During this investigation the Council has also made us aware that it has awarded money to Ms D from a subsequent grant scheme set up to support businesses impacted by the COVID-19 pandemic (the ‘Additional Restriction Grant’ scheme - ARG). It has noted that if Ms D had been made liable for rates at the time it made this award she would not have been entitled. But would have been entitled to a different scheme (‘the Local Restrictions Support Grant - LRSG) which would have resulted in a higher award. While none of this is relevant to our findings (as we have not investigated the Council’s administration of these schemes) it is potentially relevant to the injustice Ms D has suffered – something I will return to below.

Findings

28. In considering the events covered by this complaint I note at the outset the Council knew in May 2019 that the rating list in respect of the premises used by Ms D was inaccurate. Even though it visited her and found she used the premises for retail it did not either contact the VOA and ask it to update the description of the premises on the rating list or advise Ms D to do the same. This was a fault.
29. However, during this investigation the VOA has corrected the listing for the property. The Council has also confirmed that it does not consider the inaccurate description of the premises on the rating list in March 2020 prevented it paying Ms D a RHL grant. Consequently, I do not consider any injustice arises from this fault.
30. I have gone on therefore to focus on the arguments put forward by the Council for why it did not pay Ms D a grant. It has said that it could not pay her a grant because on 11 March 2020 she was not the recorded ratepayer and it did not know that her business was the sole occupier of the premises (and so should be recorded as the ratepayer). Further, that its records were correct and did not need updating.
31. I consider there is fault in this position taken by the Council. The guidance on RHL grants I have set out in paragraph 10 gave the Council discretion where it learnt after 11 March the information it held about a ratepayer was incorrect. It could take “reasonable steps to identify the correct ratepayer” – the clear implication being that if the Council then went on to do so, the ‘correct ratepayer’ could receive the RHL grant.
32. So it was wrong for the Council to say it could not pay Ms D a grant simply because she was not the registered ratepayer on 11 March. It needed to consider the facts of the case, decide if the ratepayer details needed amending and then decide if it should use its discretion to pay her a grant.
33. Considering each of these matters in turn, beginning with question of liability for rates, it is not our role to make decisions on who should be liable. But we can consider if there is fault in how the Council has arrived at its decision about who should be liable. In this case I note Ms D’s business was initially liable for rates when she began renting the premises but the Council then reverted that liability to Mr E (or his business) in November 2019. I find no fault in that decision. Because at that time Ms D explained she only rented part of the premises leased by Mr E and shared that space with another business, while Mr E also used some of the premises. As Mr E used the premises and was the lessee of the property he had a greater interest in it than Ms D or the other business. So, I see no fault in the action taken by the Council at that time.
34. But when Ms D explained those circumstances later changed, I find the Council failed to consider this information. It has maintained Mr E was liable for the rates without considering Ms D’s account of the changes in occupancy which she says led her to become the sole occupier around January 2020. While the Council has now offered to reconsider its position, this delay of around 12 months justifies a finding of fault.
35. The Council faults explained at paragraphs 31 and 34 have caused Ms D the following injustice:

• First, there is uncertainty created because the Council has not properly considered whether Ms D should have been made liable for the rates on her premises from January 2020. We consider this a form of distress.
• Second, as a consequence of this and a misunderstanding of the relevant government guidance the Council has not properly considered using its discretion to pay Ms D a RHL grant. Something which causes further uncertainty.
• Third, as the Council has itself acknowledged this has also led later to the Council only considering if Ms D can receive support from the ARG scheme rather than the LRSG scheme which was potentially more generous to businesses in Ms D’s circumstances.
• Fourth, the Council has put Ms D to unnecessary time and trouble pursuing this matter.

36. I reiterate that it is not our role to decide if Ms D should be retrospectively made solely liable for the rates from around January 2020 (or any later date). I recognise the Council will want to make checks. The contemporaneous evidence of what Ms D told the VOA in February 2020 could be helpful here. As could any records of Ms D’s contacts with Mr E. I have taken account of this when deciding on what I consider will be a fair remedy for Ms D’s injustice.

Back to top

Agreed action

37. The Council accepts the findings set out above. To remedy the injustice at paragraph 35 the Council has agreed that within 20 working days of this decision it will:

1. apologise to Ms D, accepting the findings of this investigation;
2. pay Ms D £250 in recognition of her distress, time and trouble;
3. agree to reconsider Ms D’s liability to pay rates and review its decision to refuse her a RHL grant in line with the advice set out in paragraph 38 below.

38. The reconsideration of Ms D’s liability and RHL grant will be as follows:

• First, the Council will reconsider the occupancy details of the premises rented by Ms D from January 2020 onward. It should take account of Ms D’s statements and can ask her for any supplementary information it considers necessary such as it has suggested at paragraph 26. It should allow Ms D at least 20 working days to provide any information requested.
• Second, once the Council has completed the reconsideration at a) above if it has decided to retrospectively make Ms D liable for rates on 11 March 2020, then it should, within the following 20 working days, review its decision to refuse her a RHL grant and review her entitlement to any LRSG (the latter of which can be offset against ARG funding Ms D has received). This review must take account of government guidance and the analysis set out above. If the review finds Ms D should have received a RHL grant then the Council will make a payment equivalent that Ms D would have received (the scheme now being closed). The review should be undertaken by an officer not involved in the original decision to refuse Ms D a RHL grant.

39. Ms D will have the right to make a further complaint to the Ombudsman if she considers the Council at fault in how it carries out any of the steps set out at paragraph 38. We would not expect her to make a further complaint via the Council’s complaint procedure in these circumstances.

Back to top

Final decision

40. For reasons set out above I uphold this complaint finding fault by the Council causing injustice to Ms D. The Council accepts this finding and has agreed action that I consider will remedy that injustice. Consequently, I have completed my investigation satisfied with its response.

Back to top

Investigator's decision on behalf of the Ombudsman