Summary: There was no fault in the Council’s decision the complainant was not eligible to receive a COVID-19 business support grant. This is because the Council was not aware of the business on the qualifying date. We have therefore completed our investigation.

The complaint

1. I will refer to the complainant as Mr F.
2. Mr F complains the Council decided his holiday let business was not eligible for a COVID-19 business support grant, despite being aware it had been awaiting assessment for business rates since 2017.

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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. 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)
4. When considering complaints, if there is a conflict of evidence, we make findings based on the balance of probabilities. This means that we will weigh up the available relevant evidence and base our findings on what we think was more likely to have happened.
5. 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”.

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How I considered this complaint

6. I reviewed the Council’s correspondence with Mr F, and a person acting on his behalf, as well as the Council’s case notes and records.
7. I also shared a draft copy of this decision with each party for their comments.

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What I found

8. Mr F purchased a house in the Council’s area, which he says he has let out as a holiday cottage since 2017.
9. On 19 May 2020, a person acting on Mr F’s behalf (to whom I will refer as Miss P) emailed the Council’s business rates team. She said she and Mr F had spoken to the Council “some time ago” about the property, and confirmed it was in use as a business. Miss P said they had been waiting for the “rates department” to assess the property for business rates, but due to the COVID-19 pandemic, they could no longer let the property out. She asked the Council for advice about the small business grant (SBG).
10. The Council replied on 27 May. It said the property was currently banded for council tax, not business rates, and so would not qualify for a business support grant. It advised Miss P to contact the Valuation Office Agency (VOA) for an assessment for business rates, but said the property would remain liable for council tax in the meantime.
11. Miss P emailed the Council again on 7 October. She said she and Mr F had informed the Council in December 2017 they had purchased the property, and that they had done so for the sole purpose of letting it out as a holiday home. She said they had “registered the property as a business” and that the Council had informed them the VOA would be in touch to assess it for business rates. In the meantime they had continued to pay council tax on the property.
12. Miss P said they had “made phone calls for a progress update” but the matter had never progressed any further. They had applied for a business support grant when these became available, because of the loss of business to the property; and Miss P said the Council had told them they were eligible for a grant because it was “on record” they had notified the Council of the business in 2017.
13. The Council replied on 9 October. It said it maintained its view the property was not eligible for a grant, because it had been “informed in December 2019 that this was a second home and not a holiday home”. The Council suggested Mr F approach the Ombudsman if he wished to pursue a complaint about the Council’s decision.
14. Miss P emailed the Council again on 10 October. She said she wished to appeal the decision, and refuted the Council’s comment about a second home. She reiterated the property was and only ever had been in use as a business. She also insisted the Council’s records showed they had requested an assessment of the property for business rates.
15. The Council responded on 2 February 2021. It apologised for the delay, which it explained was due to pressures on the Council’s service.
16. The Council said it had reconsidered the information Miss P had provided, but remained of the view it had properly assessed the property as a “holiday home” at the relevant time. It highlighted that Mr F had actually been paying the council tax on the property.
17. Although the Council acknowledged the property was now listed for business rates, the retail, leisure and hospitality (RHL) grant scheme had closed on 30 September 2020 and it could make no further payments.
18. The Council said its internal review process was now exhausted, and again invited Mr F to approach the Ombudsman.
19. Mr F then complained to the Ombudsman on 22 February.

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Legislative background

Small business grants and retail, hospitality and leisure grants

20. In March 2020, the government created schemes for councils to pay grants to small businesses and retail, hospitality and leisure businesses. This was because the COVID-19 restrictions affected so many of them.
21. A business’ right to a grant depends on its rateable value on the business rating list and its eligibility for certain business rate reliefs on 11 March 2020. Government guidance states later changes to the rating list, even if they are backdated to 11 March 2020, do not entitle a business to a grant. A council can make an exception if, on 11 March 2020, it already had good reason to believe the rating list was inaccurate for a particular address or business.
22. The Valuation Office Agency (VOA), not the Council, compiles the rating list and decides on liability for business rates and rateable values.  

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Analysis

23. Mr F says the Council has been aware since 2017 the property was in use as a business, and that it was not listed for business rates because no assessment had been forthcoming.
24. But the Council says it had no indication until May 2020 the property was in use as a business, rather than as a residential property.
25. The Council has provided me with copies of its relevant internal records. It says, first, its information showed Mr F purchased the property in May 2016. It then sent some correspondence for Mr F’s attention about council tax.
26. In November 2016, Mr F called the Council to discuss this. After further contact between them, in April 2017 Mr F made an arrangement to pay both outstanding and ongoing council tax on the property by direct debit.
27. The Council’s records show it had more contact with Mr F in December 2017. In particular, there is a note dated 22 December, which says a call had been received, and that the (unnamed) caller “explained that this is a holiday home and used 2/3 times a year”.
28. There are further records describing contact between the Council and Mr F through 2018 and 2019. On 20 March 2019, the Council noted it had received a call from Mr F, and that it had “explained he cannot get any discount for holiday home accommodation”. Then, on 31 July, the Council recorded it had changed its classification of the property from ‘holiday home’ to ‘second home’.
29. There is no more record of contact until Miss P’s initial email of May 2020, which I have described in the previous section.
30. Mr F, and on his behalf, Miss P, both insist the property was purchased to use as a business, and that this is all they have ever done with it. I note the property is registered with a particular holiday lettings firm, and, looking at the relevant page on the firm’s website, I can see there are comments from guests who stayed at the property going back to 2017. This certainly supports their claim the property has been in use as a business since then.
31. However, the test for the Council here is not whether there is now evidence that the property should have been listed for business rates before 11 March 2020; rather, it is whether the Council knew on 11 March 2020 that the rating list was incorrect.
32. Mr F and Miss P say they informed the Council in 2017 the property was a business, and, further to this, they say the Council told them to await contact from the VOA. They also say they chased the matter up in the interim, to no avail.
33. But the Council’s records do not support this. There is nothing to show Mr F or Miss P said the property was a business, nor any suggestion the Council either told them to contact the VOA, or referred the matter to the VOA itself, until the email exchange of May 2020. The records also do not show Mr F or Miss P contacted the Council at any point to chase up a business rates assessment.
34. In its response to my enquiries, the Council has conceded it was wrong to say it had been told the property was a ‘second home’ in December 2019. It says it cannot confirm why it made this mistake, but believes it was a misreading of the note of December 2017, which said the property was a ‘holiday home’.
35. I am left wondering whether there was some confusion here over the term ‘holiday home’. This could reasonably be read to mean both a private property, used by the owner to take holidays, or a property let out to paying guests as a business.
36. It appears possible, therefore, that either Mr F or Miss P attempted to inform the Council the property was a business in December 2017, but the Council misunderstood this – although, if so, I would also have to question the comment that it was in use ‘two or three times’ per year, which seems unlikely to be sustainable for a business.
37. Unfortunately I cannot draw any firmer conclusions on this, on the evidence available to me. But, either way, I am not persuaded this speaks to a finding of fault by the Council. Even if it did misunderstand the term ‘holiday home’, the onus was on Mr F and Miss P to explain clearly what they were using the property for.
38. And, as I have said, there is nothing at all in the Council’s records which mentions business rates, or the VOA, at that time. Before May 2020, its records are essentially just a series of notes about the payment of the property’s council tax.
39. Taking this all together, I am satisfied the Council was unaware the property was in use as a business on 11 March 2020. It had no reason to believe the property was awaiting assessment for business rates by the VOA, and in fact it appears no contact had yet been made with the VOA at all. Under the strict eligibility criteria for the SBG and RHL grant, the Council was correct to decide the property did not qualify, and so there is no fault in its decision not to pay a grant here.

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Final decision

40. I have completed my investigation with a finding of no fault.

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Investigator's decision on behalf of the Ombudsman