Summary: Mr B complains the Council did not award his business a grant under a scheme to support businesses impacted by COVID-19. We uphold the complaint finding the Council did not properly consider Mr B’s liability to pay business rates. This caused an injustice as it created uncertainty about whether Mr B therefore had an entitlement to a grant. The Council has accepted this finding and has agreed action to remedy Mr B’s injustice, as set out at the end of this statement.

The complaint

1. I have called the complainant ‘Mr B’. He complains the Council did not award his business a grant under schemes introduced in March 2020 to support businesses impacted by COVID-19.
2. Mr B says as a result he lost a source of financial support during a time of hardship for his business.

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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. 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 decision 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;
• information provided by the Council in response to written enquiries.
• relevant law and government guidance as referred to in the text below.

7. Mr B and the Council also had an opportunity to comment on a draft decision statement where I set out my proposed findings. I took account of any comments made before completing my investigation and issuing this decision statement.

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What I found

Grant schemes to support businesses impacted by COVID-19

8. In March 2020, in response to the COVID-19 pandemic, the government created two grant schemes for small businesses, administered by local authorities. The first of these was the small business grant fund (SBGF). The second was the retail, hospitality and leisure (RHL) grant scheme. These schemes closed in August 2020.
9. To be eligible to receive a small business grant the business had to be eligible to receive small business rate relief (SBRR) or rural rate relief. Eligible businesses with a rateable value of less than £15,000 would receive a £10,000 grant.
10. To be eligible to receive a RHL grant the business had to be first eligible for 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 less than £15,000 would receive a grant of £10,000.
11. Government guidance said the ERD was a relief that applied to “occupied” retail, hospitality and leisure premises (see paragraphs 5 and 10 of Business Rates – Expanded Retail Discount 2020/21: Coronavirus Response – Local Authority Guidance).
12. The guidance said the relief included shops. It said “we consider shops […] to mean hereditaments that are being used for the sale of goods to visiting members of the public” (source as above – paragraph 11). The term ‘hereditament’ refers to any rateable property or land.
13. The guidance also said “to qualify for the relief the hereditament should be wholly or mainly used for the above qualifying purposes […] this is a test on use rather than occupation. Therefore, hereditaments which are occupied but not wholly or mainly used for the qualifying purpose will not qualify for the relief” (source as above – paragraph 14).
14. Further, government guidance, common to both the SBGF and RHL grant schemes and 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”;
• “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 – version 6, paragraphs 34 to 35).

15. This guidance went on to consider “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 40 to 43).

16. The government also published ‘Frequently Asked Questions’ for local authorities administering these grant schemes. Question 18 referred to RHL grants. It asked “how should local authorities deal with businesses who, now a grant is possible, are advising them that they have been in occupation of a property for some time?”. The answer given was: “any changes to the rating list 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 ratings list is subsequently amended retrospectively to 11 March 2020. The eligible business is the ratepayer in Local Authority records for 11 March 2020. However, Local Authorities have the discretion to depart from this if they know that record was incorrect”.
17. A business could receive a payment from the SBGF or a RHL grant. It could not receive both.

Liability for business rates

18. The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer:
• occupiers;
• owners; and
• persons named in central rating lists.
19. Case law says the four conditions of rateable occupation are:
• actual occupational possession;
• exclusive occupation or possession;
• occupation or possession which is of some value or benefit to the occupier/possessor;
• occupation or possession which has a sufficient quality of permanence.
20. There is significant case law on rates liability. It is for a council to decide who is the correct liable ratepayer. However, the Ombudsman can consider if a council has followed a proper decision making process when deciding who is liable to pay rates.

Principles of good administrative practice

21. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Guidance on Good Administrative Practice”. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we expected similar standards from councils, even during crisis working. The following points are relevant in this case.
• The basis on which decisions are made and resources allocated, even under emergency conditions, should be open and transparent.
• Decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.

Key facts

22. In October 2019 Mr B contracted with an agent to rent a shop in the Council’s area with a rateable value of less than £15,000. Mr B’s business is seasonal and he focuses on the Christmas and Easter trade. The agent contacted the Council and said Mr B would be occupying the shop until 9 January 2020. The agent also told the Council that under the terms of the lease given to Mr B the agent would remain responsible for paying any business rates (i.e. the shop rent was inclusive of rates). The lease for the shop attaches a schedule of condition which includes photographs showing the shop empty with no fixtures, fittings etc
23. The Council replied to the agent saying it could not remain liable for business rates without Mr B’s consent. Mr B provided consent in an email sent in late October 2019. So, the rates remained in the name of the agent.
24. On 23 January 2020 an officer inspected the shop and took photographs. These show the shop fitted out with a counter, shelves and some items I take to be display accessories. But there were no products for sale and no-one inside. The shop had a sign on the window, in the name of Mr B’s business, saying it would re-open on 14 March 2020.
25. On 9 April 2020 Mr B contacted the Council asking if his business was eligible to receive funding to support shops impacted by COVID-19. This followed the Government announcement of grant schemes described above.
26. On 25 April the Council replied to Mr B saying the business rates bill was not in his name (or that of his business). But it asked Mr B to provide information such as his lease agreement, proof of expenses such as utilities, invoices and so on to show he was trading. Mr B clarified he held a lease for the shop inclusive of business rates.
27. On 12 May 2020 the Council amended its records. It now made Mr B liable for business rates. But only for the period 1 October 2019 to 8 January 2020.
28. Mr B queried this in June 2020. He said the agent had extended the lease on the shop to enable him to trade again over the Easter period. Mr B said he had planned to re-open on 14 March but “the reality was that we occupied the place continuously from Christmas - and, of course, we opened earlier anyway”. Mr B provided a second lease signed on 10 January 2021. This said he would rent the shop between 14 March and 19 April 2021.
29. The Council replied to Mr B. It said it had checked a social media page in the name of this business. This said the shop had re-opened on 12 March 2020. It considered Mr B had then occupied the shop again for less than 42 days. The Council said it this was too short a time to establish rateable occupancy. Consequently, his business did not qualify for a RHL grant.
30. Mr B challenged this. He said the shop was accepting deliveries in February 2020 and he had hired a member of staff before 11 March 2020. Mr B provided various invoices from suppliers dated January and February 2020 and receipts for some online sales. Mr B also provided proof he had paid an employee from 27 February 2020 onward.
31. On 13 July the Council replied to Mr B. It said it was unaware Mr B had continued using the shop after 9 January 2020. But that it had no evidence to show he traded between that date and 14 March 2020; while any trading after 14 March was for less than 42 days. The Council again said that it did not consider this long enough to establish occupancy for business rates.
32. On 16 July Mr B forwarded some further information. He provided an email from the agent which said Mr B had been “in occupancy” of the shop between Christmas 2019 and Easter 2020. The agent also forwarded an email they sent to Mr B in December 2019. In this email the agent had agreed Mr B could continue renting the shop until “just after Easter”. The agent wanted Mr B to trade between Christmas and Easter, saying “the more you open the merrier”.
33. Then, on 6 August the Council said that to receive the RHL grant Mr B needed to be open to the public for trading on 11 March 2020. It asked Mr B to confirm if this was the case. Mr B replied saying the “doors were open” to the shop from 23 February 2020. However, he did not conduct any over the counter sales before 11 March.
34. The Council then disputed this. It said the shop’s lease only ran from 14 March 2020 and this is what a sign in the shop window said. Mr B replied saying he wanted to appeal the Council’s refusal of grant as it was not believing his account.
35. A more senior Council officer therefore wrote to Mr B on 17 August. The Council said that he could not receive a grant as his business was not liable to pay business rates.
36. In October 2020 Mr B escalated his complaint. In its reply, the Council now said that it accepted Mr B had “the right to occupy” the shop between December 2019 and April 2020. However, the shop “was not open to the public on the specified date of 11 March” and “businesses were required to be open to the public on this date”.
37. In its final response the Council said Mr B could not receive a RHL grant because:

• he was not the ratepayer on 11 March 2020;
• his shop was not open to visiting members of the public on 11 March; he did not open it until 12 March 2020.

38. In reply to our enquiries the Council clarified the following:

• that it had divided liability for rates on the shop into three periods. For the period 1 October 2019 to 9 January 2020 it accepted Mr B occupied the shop. For the period 10 January and 13 March 2020 it did not accept Mr B occupied the shop. It took account of its inspection on 23 January. For the period 14 March to 19 April 2020 it accepted Mr B again occupied the shop but this was too short a period to make him liable to pay business rates;
• that it considered the government guidance quoted in paragraphs 12, 13 and 15 above meant that Mr B was not liable to receive a RHL grant in any event. It maintained this guidance required the shop to be open to visiting members of the public on 11 March and there is no evidence this was the case.

Findings

39. I find some of the Council correspondence to Mr B confusing. It advanced different reasons, at different times, for why it did not consider it could pay his business a grant in recognition of the impact of COVID-19. It also gave different dates of when it considered Mr B’s shop reopened to the public (on 12 or 14 March 2020). However, I find the Council’s position took shape over time. It advanced two key lines of argument. First, that Mr B was not liable to pay rates on the critical date of 11 March 2020; a requirement to qualify for a grant. Second, it interpreted the guidance as requiring Mr B’s shop to be open to the public on 11 March 2020. It did not find the evidence showed that it was open on that date.
40. I considered each of these points in turn. As I explained above, it is not our role to come to a view on who should be liable to pay rates on business premises. But we can consider if the Council has made a proper decision taking account of relevant factors and not ignoring anything irrelevant. In this case I note the reasons the Council advanced for not considering Mr B liable for rates after 9 January 2020 and find they all appear relevant to a decision. Specifically:

• that Mr B may not have had a rental liability for the shop between 20 January and 13 March 2020 as neither of the leases cover this period; this might suggest Mr B’s business did not occupy the shop between those dates.
• that an inspection on 23 January 2020 did not find the shop trading;
• that a period of occupancy between either 12 or 14 March and 19 April 2020 would not be enough to establish occupancy as it was too short a time.

41. However, I considered there was other evidence and argument potentially relevant to a decision on whether Mr B was in occupation of the shop between January and April 2020. This was:

• the lease agreements are contradicted by contemporaneous emails between Mr B and the agent. These do not dispute Mr B’s account that he had sole possession of the shop from 20 January to 19 April 2020. The agent’s emails imply they placed no barrier on Mr B trading between the Christmas and Easter period and encouraged him to trade in this time;
• that a test of occupancy does not rely simply on whether a shop was trading. The photographs taken on 23 January show the shop in a different condition than when Mr B began renting it. He clearly stored items necessary to trade in the shop. Whether this is enough to establish occupancy is not a question I can answer but it may provide evidence of occupancy;
• that Mr B has also provided evidence which shows he used his shop before 14 March for his business. The same social media account which said the shop had re-opened on 12 March posted on 7 March pictures of labelled items on shelves in preparation for reopening. Mr B also provides evidence of deliveries and employing a member of staff to help him over the Easter trade. Again, whether this is enough to establish occupancy is not a question I can answer but it may provide evidence of occupancy.

42. I do not find that in its decision on occupancy the Council considered the points set out in paragraph 41. For that reason, I do not consider it took all relevant evidence into account in deciding Mr B was not liable to pay rates on 11 March 2020. That was a fault.
43. I have therefore went on to consider the Council’s second argument that no grant could be payable to Mr B in any event because his shop was not open to visiting members of the public on 11 March 2020. I do not challenge the Council’s analysis of the facts here. I find the social media account persuasive that the shop opened for Easter trade on 12 March 2020. This does not mean I dispute Mr B’s account that he (or an employee) was physically present in the shop before 12 March. And I have no doubt had a customer walked into the shop they would have been served. But the facts, as shown by the sign in the window and the social media account, do not demonstrate the shop presented as open before 12 March.
44. However, I do not consider this would automatically mean the Council could not pay a grant to Mr B. I note first the Council only considered Mr B’s possible eligibility to a RHL grant and I consider further if this is correct below. Government guidance said to qualify for a RHL grant a business had to be eligible for the expanded retail discount (ERD) scheme had that been in force on 11 March 2020.
45. The guidance says the ERD scheme applied to “occupied” premises. As I have explained above the term occupation means something specific in rating law. It is not a test of whether a business is open or closed to the public on a given day. There may have been many retail businesses that were not open on 11 March but which remained occupied. For example, I do not think it likely the Council would treat as unoccupied a shop that chose to shut on a Wednesday as part of its normal opening hours but remained open the rest of the week (11 March 2020 being a Wednesday).
46. The guidance defined different categories of premises that could benefit from the ERD relief. It included under the ‘retail heading’ as those premises: “used for the sale of goods to visiting members of the public”. I consider this provides a working definition of a retail shop and nothing more. I do not consider this part of the guidance has further relevance beyond deciding if specific premises met a ’qualifying purpose’. I find the Council read this guidance as inserting the words ‘on 11 March 2020’ when they do not appear in that paragraph.
47. The Council needed to resolve the question of occupancy before it could refuse Mr B’s business a grant. But as I explained above I find the Council did not do this properly. I also find it referred to other Government guidance which was irrelevant to Mr B’s circumstances:

• First, that quoted in paragraph 13 above. This guidance set out for authorities the approach to take when it was unclear how the ratepayer used premises and whether they used them mainly for a ‘qualifying purpose’. For example, where a business may have had a retail element, but it might be arguable if this was its whole or main use.
• Second, that quoted in paragraph 15 above. It is not necessary to consider in this case what the guidance says about the rating list, because there have been no changes to the rating list. The premises in question are a retail shop and have been throughout. The guidance in paragraph 14 is potentially relevant instead which discusses changes to the ratepayer. This made clear the Council had discretion to award a grant if the details it held about the ratepayer on 11 March were incorrect but that it could identify the correct ratepayer.

48. For the reasons set out above I therefore find the Council did not properly consider Mr B’s potential entitlement to a RHL grant. That was a fault.
49. I also note the Council did not appear to have considered if Mr B may have received funding from the SBGF instead of a RHL grant. Again, the question of rateable occupancy would come first. But as the premises have a rateable value of less than £15000 then I cannot see why, if he was liable, Mr B would not have had entitlement to small business rate relief. In which case the Council could have considered an award from the SBGF as an alternative to a RHL grant.
50. The faults identified at paragraphs 42 and 48 above caused Mr B an injustice. Because the Council did not take an administratively sound decision on Mr B’s liability to pay rates or entitlement to a grant, I found there was uncertainty whether its decision to refuse a grant was correct. We consider this a form of distress. In addition, I consider the Council missed opportunities to properly consider these matters sooner which put Mr B to unnecessary time and trouble.

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Agreed action

51. The Council says that it accepts the findings set out above. Where we find fault causing an injustice to the complainant we aim to put them back in the position they should have been in but for any fault. I therefore recommended the Council apologise to Mr B, pay him a financial remedy in recognition of his distress and time and trouble. I also recommended it give detailed reconsideration to the position on Mr B’s liability to pay rates for the whole period 9 October 2019 to 19 April 2019 before reconsidering if he should therefore have been eligible to a grant. I asked it pay a sum equivalent to the grant if Mr B was so entitled.
52. In the event, the Council has responded to these recommendations slightly differently but to Mr B’s advantage. So that within 20 working days of a decision on this complaint it will:
1. apologise to Mr B accepting the findings of this investigation;
2. pay Mr B £200 in recognition of his distress and time and trouble;
3. pay Mr B £10,000 in recognition that he did not receive a grant last year.

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Final decision

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

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Investigator's decision on behalf of the Ombudsman