Summary: Mr X complained the Council wrongly refused a COVID-19 business grant, which added to the financial difficulties his business suffered during the pandemic. The Council was at fault for taking too long to make its decision and did not fully explain its reasons, causing injustice to Mr X for which it should apologise.

The complaint

1. Mr X complained the Council wrongly refused a COVID-19 business grant. He also complained the Council delayed telling him the outcome and ignored many of his emails.
2. Mr X says the lack of a grant caused him stress and added to the financial losses resulting from the COVID-19 pandemic, which meant the business could not pay the rent due.

Back to top

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)

Back to top

How I considered this complaint

6. I considered:
• the information provided by Mr X
• the information provided by the Council in response to my enquiries and in telephone interviews with officers; and
• relevant law and guidance, as set out below.
7. Mr X and the Council had an opportunity to comment on my draft decision and I considered the comments received before making a final decision.

Back to top

What I found

Relevant law and guidance

COVID-19 business grants

8. 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).
9. Grants were payable to the person recorded as the ratepayer in respect of the business on 11 March 2020. Where the council had reason to believe the information it held about the ratepayer on 11 March was inaccurate it could withhold or recover the grant and take reasonable steps to identify the correct ratepayer.

Small business grant

10. Businesses which, on 11 March 2020, were eligible for Small Business Rates Relief (SBRR) were able to apply for a payment of £10,000.
11. Eligibility for SBBR was subject to section 43 of the Local Government Finance Act 1988. This said the rate applied to occupied businesses.

Small business rates relief (SBRR)

12. A business was eligible for SBRR for 2020-21 if the rateable value for its main occupied business premises was less than £15,000. For premises with a rateable value of less than £12,000, the relief meant the business did not have to pay business rates. For premises with a rateable value of between £12,000 and £15,000 and businesses occupying more than one premises, different criteria applied, which are not relevant to this complaint.

Empty property relief

13. Business rates do not have to be paid on empty buildings for three months as they will qualify for empty property relief. This usually lasts for three months although there are exceptions. This includes where the rateable value is under £2,900 in which case empty property relief will apply until the property is reoccupied.

Valuation Office Agency (“VOA”)

14. The 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 1.9 million commercial properties for business rates: the rating list.

Liability for business rates

15. The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer:
• occupiers
• owners, and
• persons named in central rating lists.
16. 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.
17. 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.

Local Restrictions Support Grant (Closed) Addendum (LRSG)

18. The Government provided support to businesses forced to close during the second national lockdown from 5 November to 2 December 2020. This was later extended to cover the third national lockdown from 5 January to 31 March 2021.
19. Eligible businesses were those required to close in line with Government restrictions. The Health Protection (Coronavirus, Restrictions) (England) (No. 4) Regulations 2020 sets out which businesses had to close by law. This included non-essential retail, leisure, personal care, sports facilities and hospitality businesses.

Restart grant

20. Support was provided to support specific types of business, including non essential retail businesses, to enable them to reopen safely after restrictions were lifted following the third national lockdown. To be eligible, the business must:
• be the liable ratepayer on 1 April 2021;
• be engaged in offering in-person services in the relevant sectors; and
• trading (engaged in business activity) on 1 April 2021.
21. The Guidance set out the types of businesses that could be considered non-essential retail and specifically excluded some business types from the definition of non-essential retail, including vehicle repair and MOT services, taxi and vehicle hire businesses, financial providers and office buildings. However, those lists were not exhaustive and the Guidance said it was for councils to determine those cases where eligibility was unclear.

What happened

22. On 11 March 2020 Mr X’s business premises were on the VOA rating list with a rateable value of £1,975. Mr X was not recorded as the liable ratepayer in the Council’s records. The liable ratepayer was recorded as the owner of the property and the property was recorded as being empty and empty property relief applied.
23. Mr X applied for SBRR on 8 April 2020 for his business. He provided a copy of a lease dated 11 November 2019. The Council has no record of receiving the April 2020 email and Mr X sent the information again on 27 May 2020. The lease was for a term of 12 months from 11 November 2019 and the rent was £250 per month. At the time the lease was signed Mr X was not a director of the tenant company according to Companies House and he did not become a director until December 2020.
24. On 19 June 2020, Mr X applied for the small business grant. On his application form he stated the business operated in the “retail” sector and was not receiving SBRR. He said the business considered accident claims, providing a customer service and selling vehicle parts.
25. The Council refused the grant on 23 June 2020. It said the business “does not appear to be eligible to receive the grant because it was not operating as at 11 March 2020”. The Council said that to change the liable business in its records it would need to see:
• proof of occupation of the premises on or before 11 March 2020;
• written details on the change of ownership;
• details of rent passing under this commercial arrangement;
• trading accounts;
• gas and electricity usage for the business; and
• bank accounts
26. Mr X provided some of the information requested. The Council said it still needed:
• trading accounts;
• a company bank statement showing transactions for the period February and March 2020; and
• public/employee liability insurance documents.
27. Mr X responded on 10 July 2020, saying:
• he could not provide trading accounts because they are done a year in arrears and the business only started trading in November 2019;
• he had provided documents from solicitors and invoices for February/March 2020, which he considered were sufficient. Under data protection regulations he was not obliged to provide bank statements or financial information; and
• the business had only one employee and did not have insurance.
28. The Council responded on 15 July 2020. It:
• asked about Mr X’s connection with another company with a similar name and said it would refer the matter to its fraud team due to the possible connection;
• said it was required to make enquiries where the business was not previously registered for business rates to ensure payments were made in line with Government criteria and prevent fraud; and
• asked for bank statements showing transactions for February/March 2020. It said: “You are not obliged to provide these but if you choose not to your grant application will be rejected”.
29. Mr X responded on 24 July 2020. He provided some further documents, including two bank statements, one of which covered the period from 10 March to 8 April, and the other for the period 9 June to 8 July. He also provided a letter from his accountants confirming his business started trading from the address on 1 February 2020.
30. The Council asked why there were no rent payments showing on the bank statements. On 8 August 2020 Mr X said this was because there was no rent payable between 1 November and 24 December, and that rent since then was paid in cash. He provided two invoices, one for rent from 1 November 2019 to 24 March and the other for the period 24 March to 25 June 2020. In each period the rent was £750. Both invoices were marked in hand “PAID CASH” with a signature. The later invoice bore the stamp of an estate agency.
31. Mr X asked for an update on 2 September and complained on 1 October 2020. He sent further emails asking for updates on 5 and 12 January 2021, following which he complained to us.
32. Mr X was not able to make online applications for later grants, including the Local Restrictions Support Grant (LRSG) in late 2020 and the Restart grant in Spring 2021 because he did not have a business rates account number. This would not have prevented him from applying for a discretionary grant but he did not do so.
33. On 10 April 2021 Mr X asked the Council about Restart grants. The Council officer could not locate a business rates reference for him and asked him to provide an account number. Mr X replied on 15 April 2021 by providing copies of the grant communications in 2020. The Council responded on 21 April 2021. It confirmed the business was not eligible for the grant because the company was not the registered ratepayer and “the evidence provided was not sufficient to support occupation”.
34. In response to my enquiries, the Council said the evidence was not sufficient to show the business occupied the premises on 11 March 2020. This was because it had not been able to verify the information provided, most of which related to the period after March 2020. It found no trace of this company operating from the application address in March 2020 and Mr X has not provided any evidence since that suggests the position has changed subsequently.

My findings

35. We are not an appeal body. We can consider whether there was fault in the decision making process. If there was no fault in the process, we cannot comment on the decision reached.
36. Mr X’s business was not recorded as the liable ratepayer on 11 March 2020. This meant the business had no automatic entitlement to the small business grant. However, the Guidance said councils could take reasonable steps to identify the correct ratepayer where they had reason to believe the information it held about the ratepayer on 11 March was inaccurate. The Council had discretion about whether to pay a grant and was therefore entitled to ask for evidence to show the business was in occupation of the premises on the relevant date.
37. Although not specifically set out in the Guidance, before paying the grant, the Council would need to be satisfied that:
• the business was the ratepayer;
• the premises were occupied by the business and entitled to SBRR; and
• that SBRR should be back-dated to 11 March 2020 (or earlier).
38. Mr X did not provide all the evidence the Council asked for. He did provide a copy of the lease and some evidence that rent was paid in cash from late December. However, the Council did not accept this was sufficient to show occupation on the relevant date and it could not establish the company was occupying the premises in March 2020. I have discussed the cases with officers from the business rates team and the fraud team and I am satisfied that they made appropriate checks. I have not found fault with the way the Council considered this and therefore I cannot comment on the decision it reached about occupation.
39. That said, the Council should have provided Mr X with clear reasons for refusing to accept the evidence and its failure to do so was fault. In response to my enquiries, the Council has provided satisfactory reasons for not exercising its discretion to pay the grant and therefore it is not appropriate for me to ask it to reconsider the application.
40. As a result of its decision that the business was not occupying the premises, the business was not eligible for SBRR, nor was it eligible for the small business grant, both of which required the Council to be satisfied the business was occupying the premises.
41. Since the Council did not accept Mr X’s business was the liable ratepayer, it was not possible for him to apply online for some other grants, including the Local Restrictions Support grant (LRSG) and Restart grant. This was because those grants were only available for ratepayers and Mr X needed a business rates account number to apply. The Council has informed Mr X the business is not eligible for those grants because it is not recorded as the liable ratepayer.

Customer service

42. In the period to August 2020, Mr X responded to the Council’s requests for further information, although he did not provide all the evidence it asked for (some of which he said it was not possible for him to provide). After that he sent emails asking for updates. I have seen no evidence the Council communicated with him between September 2020 and April 2021. I am aware the Council’s fraud team were investigating during that period, and that the team was under pressure due to increased workload as a result of the COVID-19 pandemic. However, I consider six months was too long to make its decision about the grant. In addition, it should have been possible to respond to Mr X’s emails even if the information it could provide was limited. The delay and failure to keep Mr X updated was fault.

Back to top

Agreed action

43. The Council will, within one month of the date of the final decision, apologise to Mr X for the delay in reaching a decision about the small business grant, its failure to respond to requests for updates in the meantime, and its failure to provide full reasons for its decision in April 2021.

Back to top

Final decision

44. I have completed my investigation. I have found fault leading to personal injustice. I have recommended action to remedy the injustice.

Back to top

Investigator's decision on behalf of the Ombudsman