Summary: Mr X complained the Council wrongly refused COVID-19 business grants. The Council was not at fault for the way it considered whether Mr X’s business was occupying the business premises in March 2020. This meant the business was not eligible for a small business grant. It was not at fault for refusing other COVID-19 business grants.

The complaint

1. Mr X complained the Council:
• delayed in dealing with his application for a COVID-19 small business grant;
• persistently ignored his communications about the application; and
• wrongly refused to pay the grant.
2. The failings meant Mr X was put to additional time and trouble pursuing the matter and the lack of a grant payment added to the financial difficulties caused by the COVID-19 pandemic.

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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. 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. 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)
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”.
6. 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

7. I considered:
• the information Mr X and the Council provided;
• relevant law and guidance, as set out below; and
• our guidance on remedies.
8. Mr X and the Council had an opportunity to comment on my draft decision and I considered their comments before making a final decision.

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What I found

Relevant law and guidance

COVID-19 small business grant

9. 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).
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.
12. 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 they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer. The Guidance said councils should ignore changes to the rating list after 11 March 2020, even if back-dated, unless they were factually aware on that date the rating list was inaccurate. In those cases a council could 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.

Local Restrictions Support Grant (Closed) Addendum) (LRSG)

13. 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.
14. 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

15. Support was provided to support specific types of business, including non essential retail businesses and hospitality 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.
16. The Guidance defined non-essential retail as a business that is open to the public and is used mainly or wholly for the purposes of retail sale or hire of goods or services, where the primary purpose of products or services provided are not necessary to the health and well-being of the public. It defined hospitality as a business whose main function is to provide a venue for the consumption and sale of food and drink.
17. The Guidance set out the types of businesses that could be considered non-essential retail and specifically excluded some business types, including office buildings.

Additional Restrictions Grant (ARG)

18. The Government also provided discretionary funding for councils to support businesses that were required to close or had been severely impacted by the second national lockdown.
19. The Guidance, issued on 4 November 2020, said councils could decide how much funding to provide to businesses and which businesses to target. Councils could use the funding to support businesses that were important to its local economy.
20. The Guidance also said:

“In taking decisions on the appropriate level of grant, [councils] may want to take into account the level of fixed costs faced by a business in question, the number of employees, whether they are unable to trade online and the consequent scale of coronavirus losses”.

21. This Council’s discretionary scheme was decided in line with Government Guidance. To be eligible, the business must:
• Be trading in Kirklees;
• Have been open and trading as usual before the restrictions;
• Have been legally required to close or have been significantly impacted by local restrictions from 5 November 2020. Businesses not forced to close will be required to provide evidence demonstrating a significant impact on turnover/sale as a result of stricter social distancing being implemented;
• Be operating in one of more of the following sectors:
1. independent non-essential retail;
2. leisure;
3. hospitality;
4. visitor accommodation;
5. personal care and close contact services;
6. retail, hospitality. leisure supply chain;
7. entertainment and tourism (including events and supply chain businesses); and
8. community facilities/centres, including faith-based venues.

Valuation Office Agency (“VOA”)

22. 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

23. The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer:
• occupiers
• owners, and
• persons named in central rating lists.
24. 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.
25. 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.

What happened

26. Mr X owns a commercial building that leases units to other businesses and operates a business that provides services to the tenants from a unit in the building.
27. The units within the building were separately rated and appeared as individual premises on the VOA ratings list as at 11 March 2020. On 13 May 2020, the VOA informed the Council that most of the units had been sub-divided. The change was back-dated to 2 January 2020.

Small Business Grant

28. As at 11 March 2020 the commercial unit the business operates from was not on the ratings list. It was created when the units were sub-divided. The VOA informed the Council on 13 May the unit was rated as a separate unit, a change that was back-dated to 2 January 2020. The Council said it set up the unit in its records on 17 June 2020 and told Mr X it had done so on 18 June 2020.
29. Mr X completed a form to register with business rates and sent this to the Council by email on 27 May 2020. In June 2020 he applied for Small Business Rates Relief (SBBR) and a Small Business Grant (SBG). The Council issued a business rates bill on 23 June 2020, which showed Mr X’s business as the liable ratepayer and SBRR applied.
30. On 3 July 2020 Mr X emailed to say he had still not got the grant. He sent further chaser emails on 10 and 14 July 2020. The Council responded on 14 July 2020. It said its Audit team needed to carry out further checks.
31. On 18 July 2020 Mr X wrote to the Council saying he was “blown away” by the suggestion of checks to prevent and detect fraud. He provided details of the tenants that rented units in the building. He said they were all well established businesses and none had received duplicate grants.
32. The Council said it noted the information he provided, which it had passed to its fraud team. It outlined its grant scheme assurance process and said it could not make a decision on the grant application until the fraud team had completed its enquiries.
33. Mr X asked for an update on 17 August 2020. The Council sent an out of office reply that said the officer was not available until 7 September. Mr X sent a chaser email on 2 September. The officer replied on 9 September that the fraud team’s investigation was ongoing. Mr X contacted his local councillor. The local councillor told the Council he could personally vouch that Mr X traded from the business premises. The Council explained the delay was because the fraud team was a small team and had received an unprecedented increase in referrals relating to COVID-19 grant applications.
34. On 28 September 2020, the Council wrote to Mr X with its decision. It refused the grant because there was insufficient evidence of occupation as at 11 March 2020. It provided a link to the Guidance and explained if Mr X was unhappy with the decision, he could contact its reconsideration team.
35. Mr X complained. He said:
• he had sent many chaser emails that were not replied to;
• he had provided evidence of occupation; and
• the Council had not asked him to supply further evidence.
36. On 8 October, Mr X provided further evidence, including:
• pictures of the reception and front entrance to the offices;
• an HMRC letter stating the company’s reference for corporation tax purposes dated March 2020;
• letters from his accountants and solicitors, both of whom were also tenants in the commercial building, confirming the business was trading from the business premises on 11 March 2020;
• a lease agreement; and
• a registration certificate from the Information Commissioner’s Office dated December 2019.
37. On 30 October the reconsideration team asked Mr X to provide:
• evidence of rental payments made to the landlord;
• proof of trading from January 2020;
• bank statements from January 2020; and
• a full copy of the lease. (It said the copy provided did not show the rental figure and was not signed or dated).
38. Mr X was unhappy he was being asked to provide further evidence and said he would not do so unless the Council answered a series of questions. He said the Council was delaying matters by asking for evidence of occupation, which he had already provided, and was disrupting his business because of the complaint he had made. The Council responded to his questions and explained in detail why it was not satisfied the evidence provided was sufficient to establish the business was in occupation on 11 March 2020.
39. Mr X remained unhappy and did not provide the further evidence requested. The reconsideration team wrote to him with its decision on 8 December 2020. It said it had reviewed the case and considered the information Mr X provided. However, it remained of the view he had not provided sufficient evidence to prove occupation at 11 March 2020. It said this was its final decision.

Local Restrictions Support Grant (LRSG)

40. Mr X applied for a LRSG on 4 December 2020. The Council refused the grant on 9 December 2020 because it said property management services could operate as they do not depend on providing direct in-person services from the premises. It said the LRSG was only available to businesses that were required to close because of national restrictions from 5 November to 2 December 2020, and provided a link to further information on the Gov.uk website.
41. On 29 December 2020 Mr X sent a letter from his accountants, which said the business’s activities including providing a reception and waiting room area for tenants, for which face to face interaction was needed. The letter said the business also hired out a conference room, which was severely affected by restrictions. Mr X also sent a photo of the reception area. On 16 January 2021 he asked for an update. He confirmed he wanted to appeal the decision and also to complain.
42. The Council’s reconsideration team reviewed the application and emailed Mr X on 26 February 2021. It said its original decision would stand because the business was not required to close and because it did not operate in one of the eligible sectors. However, it said it had asked another team to consider whether the business was eligible for a discretionary grant, based on the information already provided.
43. On 10 April 2021 Mr X told the Council he had not heard from it about the Restart grant. On 15 April the Council said it had refused the LRSG because the business was not required to close, so it was also not entitled to a Restart grant. Also on 15 April Mr X asked the Council to respond to a letter his solicitors had sent on 30 March 2021. The Council replied on 22 April 2021. It acknowledged receipt of the solicitor’s letter but had nothing further to add. The business was not eligible for the LRSG because it was not forced to close. The reconsideration team had reviewed the case and upheld that decision.

Additional Restrictions Grant (ARG) – discretionary scheme

44. Following the LRSG reconsideration decision in February 2021, the Council also considered whether Mr X’s business was eligible for a discretionary grant. Its record shows it considered:
• the nature of the business premises, which was a reception area;
• the bank statement Mr X provided, which showed no income for the period; and
• information available on the Companies House website.
45. It refused the application because the business was not operating in one of the eligible sectors, and sent its written decision on 16 March 2021.

My findings

46. We are not an appeal body. It is not my role to say whether the Council’s decisions were correct nor to substitute my own judgement for that of the Council. If there was no fault in the decision-making process, I cannot comment on the decisions reached.

Small Business Grant

47. To be eligible for the grant the business premises had to be on the rating list on 11 March 2020. The Guidance said councils should ignore changes to the rating list after that date, even if back-dated to an earlier date, unless they were aware on 11 March 2020 the rating list was inaccurate.
48. Mr X’s business premises were not on the rating list as at 11 March and the Council was not aware the rating list was inaccurate at that date. The VOA notified it about changes to the rating list on 13 May 2020. The Council was entitled to ignore those changes when it considered the SBG application.
49. However, Government Guidance did not specifically address the question of premises that were on the rating list but then divided into separately rated units after 11 March 2020.
50. Although there is no specific Guidance on this, I consider the Council could consider paying a grant in these circumstances if it was satisfied that:
• the business was the ratepayer;
• the premises were occupied by the business and entitled to SBRR;
• that SBRR should be back-dated to 11 March (or earlier); and
• there were no other exclusions that applied to the business or the premises.
51. In June 2020, the Council amended its records to show the business as the correct ratepayer and applied SBRR. In considering the grant, the Council needed to be satisfied the business was in occupation of the premises on 11 March 2020. It was therefore appropriate for the Council to seek relevant evidence from Mr X, including the lease, utility bills and bank statements for the business.
52. Mr X did not provide all the evidence sought, which was his choice. Based on the evidence provided, the Council was not satisfied there was sufficient evidence to show occupation and there was no fault in the way it considered this. Since it had not established occupation, e the business was not eligible for the small business grant.
53. I consider the Council could have asked for the further evidence earlier, although I cannot say this would have meant it reached its final decision any sooner, given the enquiries its fraud team was making. The fraud team took just over two months to complete its enquiries but that was not excessive, given the pressures resulting from the high volume of COVID-19 grant applications at the time. In addition, there were some delays in Mr X providing evidence. In the circumstances, although it took from 18 June to 18 December 2020 to reach a final decision, I do not consider this warrants a further finding of fault.

Local Restrictions Support Grant (LRSG)

54. Government Guidance said eligible businesses were those forced to close by law during the second and third national lockdown. Mr X’s business was not one that was on the list of businesses forced to close. The Council had no discretion about this. It was correct to say Mr X’s business was not eligible for the LRSG.

Restart grants

55. The Council said the business was not eligible for the Restart grant because it was not forced to close. Whilst the Restart grant was primarily to support businesses to re-open safely, the Guidance says the business was “likely to have been required to close” when considering if a non-retail business is eligible, not that it must have been required to do so. That said, the Guidance specifically excludes office buildings from eligibility in that category. The business does not satisfy the definition of a hospitality business for this scheme. Therefore, although the Council could have provided more detailed reasons, it was not at fault for concluding the business was not eligible for a Restart grant.

Additional Restrictions Grant

56. The Council also considered whether the business was eligible for a discretionary grant. The business operated a reception area for tenants in the commercial building. The Council decided this did not fall into the retail, leisure and hospitality sectors and therefore was not eligible for the discretionary scheme. Although Mr X disagreed with this decision, it was one the Council was entitled to make. In any case, the record shows the business had also not provided evidence that demonstrated it was significantly impacted by the COVID-19 restrictions. Therefore, the Council’s refusal was in line with its published scheme.
57. The Government gave councils wide discretion in designing their discretionary schemes to meet the needs of the local economy. I have seen the decision-making record and there is no evidence of fault in the way the Council decided its scheme.

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Final decision

58. I have completed my investigation. I have not found fault.

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Investigator's decision on behalf of the Ombudsman