Summary: Mr Y complains the Council wrongly refused Mr X a business grant causing him financial hardship. We find fault by the Council causing injustice. The Council has since paid Mr X the grant and £150 however we recommend the Council pay a further £150 for distress and uncertainty and take action to prevent recurrence of identified faults.

The complaint

1. Mr Y complains the Council was wrong to refuse a small business grant to Mr X’s business. He says Mr X was unable to trade for a year due to the COVID-19 pandemic yet had little financial support.

Back to top

The Ombudsman’s role and powers

2. 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)
3. 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)

Back to top

How I considered this complaint

6. I spoke to Mr Y and I reviewed documents provided by Mr X, Mr Y and the Council.
7. I gave Mr Y and the Council the opportunity to comment on my draft decision. I considered any comments before making a final decision.

Back to top

What I found

8. The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer:
• occupiers
• owners, and
• persons named in central rating lists.
9. 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.
10. The case law on rates liability is highly technical. 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.

Business grants

11. 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).
12. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
13. Funding was payable to the person recorded as the ratepayer in respect of the business on 11 March 2020. However, where a council had reason to believe the information they held about the ratepayer on 11 March was inaccurate, they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.

Council policy

14. In response to my enquiries the Council provided a copy of emails it exchanged with the Government. These show that on 20 July 2020 the Government told all councils the grant schemes would close on 28 August 2020 and so that should be the last date for applications. However, councils were able to apply an earlier deadline for applications if they wished. It recognised some applications would still be in progress on 28 August and so it would allow councils until 30 September to work through those and make final payments under the scheme.
15. The Council has also provided emails to show it updated its website on 7 August 2020 to warn the latest deadline to submit an online application form for a grant would be 4.30pm on 20 August 2020. This was to allow it time to check eligibility and process payments by 28 August. It has also provided screenshots to show it advertised this through social media on 10 and 11 August 2020.

Principles of good administrative practice

16. 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.

• Basic record keeping is vital during crisis working. There should always be a clear audit trail of how and why decisions were made.
• Where new or adapted policies and procedures are brought in, ensure frontline staff are clear about any new expectations so they give the right advice to service users.
• 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.

What happened

17. Mr Z leased Property A from Mr X. The Council had on file a copy of the lease which was to run from 2017 to 2022.
18. The Council recorded Mr Z as the ratepayer at Property A, which benefitted from SBRR.
19. On 27 March 2020 the Council to wrote to Mr Z to say its records showed he was eligible for a business grant. It said grants were only payable to the person or business responsible to pay business rates on 11 March 2020. He was to complete a form to allow it to process the payment.
20. Mr X says Mr Z passed this information onto him, as Mr Z had since left the business which Mr X continued to run.
21. In April 2020 Mr X applied for a grant for his business at Property A.
22. Mr X says on 17 June the Council asked him to provide further documents so that it could record him as the ratepayer. He says he provided these but heard no further.
23. On 20 August Mr X contacted the Council by phone chasing a response to his grant application. The Council has not provided any record of this call. However, further to the call, Mr X sent the Council a copy of his lease and a utility bill.
24. On the same day the Council told Mr X that to register him for business rates he should provide:
• proof of trading prior to and including 11 March 2020;
• invoices for stock etc;
• public liability insurance;
• accounts details from his accountant.
25. It also said he should apply for a grant before the 4.30pm deadline that day.
26. On 21 August Mr X sent the Council:
• photos of his shop;
• invoices for stock; and
• account details from his accountant.
27. He explained he did not have public liability insurance. However, he had already applied for a grant and was asked for more details in June which he provided. He said the Council should already have his application and all the details requested.
28. On 21 August the Council visited Property A to see if the business was trading. It has provided photos to show it found it empty.
29. On 27 August the Council told Mr X it would not pay him a grant because it did not receive the information requested before the closing date of 4.30pm on 20 August.
30. On 1 September Mr X raised a complaint via his MP. He said he had already given the Council evidence to support his application. Then on 20 August the Council asked for more evidence which he could not provide sooner than 21 August. On 9 September Mr X completed an online complaint form. He complained the Council delayed responding to his grant request and then closed for applications early. He had applied in time and so it should pay him the grant.
31. The Council replied to Mr X’s MP on 11 September. It explained to receive the SB Grant a business had to meet the following criteria:
• Rateable value less than £15,000
• In receipt of Small Business Rates Relief
• Be the ratepayer as at 11/03/2020
• One grant per eligible hereditament
32. It records showed a tenant occupied the property from 2017 up to 20 August 2020. Its officer inspected the property on 20 August 2020 and on finding it empty closed the account in the tenant’s name. However, to qualify for a grant the business had to be trading and paying rates as at 11 March. It decided to close the online application form on 20 August to allow it time to deal with applications before the closing date of 28 August.
33. The Council gave the same response to Mr X on 29 September.
34. On 4 October Mr X complained the Council had reached its decision based on incorrect information. He said:
• In 2017 he and Mr Z ran a business from Property A. Mr Z was recorded as the ratepayer. They qualified for SBRR.
• In 2019 Mr Z stepped back for health reasons but they overlooked changing the name of the ratepayer.
• In 2020 the Council asked Mr Z to apply for a grant. Mr Z gave this letter to him. On 4 June he sent the Council documents for it to change the name on the account. But for some unknown reason it did not do this until 20 August.
• Due to the lockdown he sold all stock and did not order further stock, therefore the shop was empty when the Council visited in August.
35. The Council replied on 3 November that:
• Mr X was not eligible for the grant as he was not the ratepayer on 11 March 2020.
• On 11 March it had information that Mr Z was the ratepayer.
• When Mr X gave it information that Mr Z was no longer occupying the property, it visited and on finding it empty changed liability to Mr X on 21 August.
• Mr X did not evidence he was trading from Property A in March 2020 before the closing date for the scheme and so it could not pay him a grant.
36. In response to enquiries the Council:
• Explained it rejected Mr X’s grant application as he was not the recorded ratepayer. However, acknowledged it should have written to Mr X in response to his grant application, explaining why it rejected the grant and the information needed to update the ratepayer on the account. However, it did not do so. It said this was likely due to human error due to the limited resources, thousands of applications and pressure to act quickly.
• Said it had no contact with Mr X after receiving his application in April 2020 until he chased it on 20 August 2020 and so could provide no records of contact during this period.
• Said it had since identified Mr X did provide the information needed before the grant deadline and so he should have received the grant. It had written to Mr X apologising and paid him £10,000, equal to the grant he should have received. It also gave him a further £150 for stress, inconvenience, time and trouble. And it recorded Mr X as the liable ratepayer effective from 1 November 2019.
37. In response to my request for a copy of any relevant law, policy or guidance that said a business had to be trading on 11 March to be eligible for the SB Grant, the Council referred me to a document. However, on review, this made no reference to trading.
38. Because the Council was unable to provide any records of contact between 20 April and 20 August 2020 I asked Mr Y to provide any documents. Mr Y provided:
• An email dated 4 June 2020 showing Mr X contacted the Council’s business rates team that day.
• An email dated 17 June 2020 from the Council to Mr X asking him to provide more information. It needed the address of the property, a copy of the lease, and proof of trading.
• An acknowledgement email from the Council to Mr X, dated 6 July 2020.

Findings

39. The evidence provided by the Council shows the Government decided to close the grant schemes on 28 August 2020 but gave councils discretion to stop accepting applications earlier than this date. The Council has explained it introduced an earlier deadline to allow it time to process applications by 28 August. It has also evidenced it published this information and its reasons. I find no fault in the Council’s decision making process in this respect.
40. Businesses in receipt of SBRR were eligible for the SB Grant. Funding was payable to the ratepayer as at 11 March 2020 unless a council had reason to believe the information it held about the ratepayer was incorrect in which case it had discretion to identify and pay the correct ratepayer.
41. The business at Property A received SBRR, however on 11 March 2020 Mr X was not the recorded ratepayer.
42. Mr X applied for grant in April 2020, well within the Council’s deadline for applications. Despite the Council’s lack of records, Mr X has evidenced the Council did contact him to ask for more information. Given Mr X’s submissions and the corroborating emails, I accept on balance he provided that information. However, the Council did not contact Mr X again until he chased it in August. That the Council did not provide Mr X with a decision on his application, reasons for its decision or the opportunity to challenge that decision in good time is fault. Further, the Council’s lack of records of its contact with Mr X between April and August is further fault.
43. Upon Mr X’s further evidence of 20 and 21 August the Council refused a grant on the basis he did not meet the deadline. However, the Council did not publish a deadline for supporting evidence, rather the deadline was for applications to allow time for further checks. Mr X had applied for the grant in April, well within the deadline. I am also mindful that any delay in his providing supporting evidence was due to the Council’s own lack of responsiveness earlier in the process. I consider the Council did not apply its policy correctly in refusing to process Mr X’s grant application, which it received in time. This is fault.
44. During the complaints process the Council told Mr X he did not evidence he was trading from the Property A on 11 March in order to be eligible for the grant. However, the Council has not pointed to any law or policy that requires a person to be trading on 11 March to be eligible for either SBRR or the SB Grant. Rather Mr X needed to be in rateable occupation to receive rates relief and then the grant. The information provided by the Council was incorrect. This amounts to fault.
45. I note the Council has since apologised, paid Mr X the grant and paid a further £150 for its errors. However, Mr X faced a long delay in receiving the grant. He suffered distress and uncertainty from April to September 2020. And he was put to time and trouble complaining to the Council and then to the Ombudsman to resolve this. I therefore consider a further payment is due beyond the £150 already offered. While the grant schemes have since closed, the Council will continue to make decisions on business rates’ liability, and I therefore consider further training to its staff is warranted to prevent injustice to others in future. I also consider the Council needs to take action to ensure it keeps records properly.

Back to top

Agreed action

46. To remedy the injustice set out above I recommend the Council take the following actions:
47. Within one month:
• Pay Mr X a further £150 for distress and uncertainty;
48. Within three months:
• Provide training to relevant staff on assessing business rates’ liability;
• Take action to identify why it had no records of contact between 20 April and 20 August 2020; take action to prevent recurrence and; update the Ombudsman.
49. The Council has accepted my recommendations.

Back to top

Final decision

50. I find the Council at fault in its decision making and communications with Mr X on his grant application. The Council has accepted my recommendations I have completed my investigation.

Back to top

Investigator's decision on behalf of the Ombudsman