Summary: Mrs X complained the Council failed to take account of relevant powers to help her in respect of business rates at a pub following the death of the landlord during lockdown. Mrs X says the demand for payment of around £10,000 causes her significant financial hardship. There was no fault in the Council’s consideration of her eligibility to the Expanded Retail Discount and Retail, Hospitality and Leisure Grant but it was at fault for not inviting her to make an application for Hardship Relief. Mrs X can now make such an application which is a suitable remedy.

The complaint

1. Mrs X complained the Council failed to take account of relevant powers to help her in respect of business rates at a pub following the death of the landlord during lockdown.
2. Mrs X says the demand for payment of around £10,000 causes her significant financial hardship.

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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 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 a 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. As part of the investigation, I have:
• considered the complaint and the documents provided by the complainant;
• made enquiries of the Council and considered the comments and documents the Council provided;
• discussed the issues with the complainant;
• sent my draft decision to both the Council and the complainant and taken account of their comments in reaching my final decision.

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What I found

Expanded Retail Discount (ERD)

8. In April 2020 the Government published “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance”.
9. The guidance stated that properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used for retail, hospitality or leisure.

Retail, Hospitality and Leisure Grants

10. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small businesses. Relevant to this complaint it created Retail, Hospitality and Leisure grants (RHLG) targeted at those sectors.
11. Government guidance said local authorities should pay the RHL grant to “the person who according to the billing authority’s records was the ratepayer in respect of the hereditament on 11 March 2020”. But it also advised the authority could withhold funding if it had “reason to believe the information that they hold about the ratepayer on 11 March is inaccurate”. It also advised the Council could take steps to identify the correct ratepayer. (Grant Funding Schemes – Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund: Guidance for Local Authorities, March 2020 paragraphs 32 and 33)

Hardship Relief

12. The Council has the ability to reduce business rates in a variety of situations. For organisations in financial difficulties, it will consider hardship relief on the individual merits of each case, when evidenced that it is in the interests of the community to do so.

Key facts

13. Mrs X owns a pub which she leased to a tenant, Mr Z. In accordance with lockdown rules, Mr Z closed the pub on 27 March 2020. On 4 April Mr Z died. On advice from a solicitor, Mrs X took possession of the pub on 6 April and boarded it up.
14. Mrs X contacted the Council’s business rates department to change the account details. She explained the situation and said she understood there was a 12 month hold on business rate payments as well as grants being paid to businesses forced to close.
15. The Council responded on 11 June 2020. It explained it had made Mrs X and her husband liable for the business rates from 6 April and awarded the empty property relief. It said that as the property is empty, she did not qualify for the ERD. It also explained that because she was not the ratepayer on 11 March 2020, she was not eligible for the RHLG.
16. Mrs X contacted the Council again saying she felt the Council’s position was harsh and unfair. She said the pub should not have been given empty status but closed status. She said she could not understand how the Council expected her to pay business rates when the government had forced the business to close. She asked the Council to reconsider its decision and to support the pub in the same way it was supporting other businesses.
17. The Council responded explaining again she was not entitled to the ERD as the property was found abandoned, boarded up and the insurance increased to take account of no-one being resident. It said that in rating law this means the property is classed as empty and so three months empty property relief has been awarded. The Council went onto explain that the guidance regarding the RHLG was very clear that as she was not the ratepayer on 11 March 2020, she was not entitled.
18. Mrs X continued to correspond with the Council asking it to help her. She explained the business had been forced to close and so had no income while she was expected to pay loans and other expenses. On 2 July, the Business Rates Manager wrote again saying it could not ignore the legislation and guidance. It said the only assistance it could offer was an extended payment plan outside the current instalment option showing on the rate account.
19. Mrs X wrote again on 5 July. She said the pub cannot be assumed to be empty. She said it was closed not empty. She said the punitive decision to give no support will force the pub out of business. She said she did not know how the Council expected any payment to be made given the very real difficulties she was facing.
20. The Council replied saying she did not meet the criteria for the RHLG and the Council had no discretion to make an award when businesses fall outside of the set criteria. It said the grant can only be awarded to the party that was liable for the business rates on 11 March and it was Mr Z who was liable on that date. It said that once the pub re-opened, any tenant would be entitled to apply for the ERD for the remainder of 2020/21. The Council also said that if Mrs X failed to pay the business rates it would seek a liability order in the Magistrates’ Court.
21. Mrs X made a formal complaint to the Council on 14 July. In her complaint, Mrs X set out why she considered she should be given a business rates exemption. She again explained the financial difficulties facing her family and that the Council should consider using its discretionary relief powers.
22. In response the Council said it had completed a review, independent of the business rates team. It said the panel agreed Mrs X did not qualify for the RHLG. It said she had not been refused the grant because the pub was now closed but because she was not liable for business rates on the qualifying date of 11 March 2020. It also explained again why it had treated the premises as empty for rating purposes.
23. The Council said that it sympathised with Mrs X’s situation and the unfortunate set of circumstances she found herself in. It said the Council had no discretion to change the guidance or the regulations to meet ratepayers’ circumstances, no matter how unfortunate they may be.
24. Mrs X escalated her complaint to stage two of the Council’s complaint procedure. She said her main complaint was the Council illegally imposing business rates when the premises qualify for an exemption/relief. Mrs X said that the Government stated that premises closed temporarily due to coronavirus should be treated as occupied for the purposes of the ERD. She said the pub only closed because of the Government rules. She said there were other exemptions set out in the non-domestic rate regulations the Council had ignored. She also asked how she could pay when there is no money coming in. Regarding the RHLG, she felt the circumstances were extraordinary and extremely unfortunate and asked the Council to use its discretion.
25. The Council replied setting out how it considered complaints and said Mrs X was disagreeing with government guidance and the subsequent decision arising from how this had been applied by the Council. It said this was not a ground for complaint covered by its policy.

Analysis

26. I am satisfied the Council has been clear and consistent regarding its reasons for refusing the ERD and RHLG. It refused the ERD because the premises were not occupied from 6 April 2020 onwards. On this date, Mrs X became liable for the business rates and the premises were boarded up. In respect of the RHLG, Mrs X was not the ratepayer on the qualifying date of 11 March 2020. While councils had discretion to pay someone not listed as the ratepayer on 11 March 2020, this was only in cases where it was factually clear the rating list was inaccurate on that date. Mr Z was listed as the ratepayer on 11 March 2020 and there is no evidence to suggest this was inaccurate. I find no fault in the Council’s decision regarding refusal of the ERD and RHLG.
27. Mrs X corresponded with the Council about this matter between April and October 2020. In this correspondence, Mrs X, on many occasions, explained her financial circumstances in detail and the difficulties she faced paying business rates of £10,000. She even asked the Council to use its discretion to reduce the business rates. At no point did the Council mention it had discretion to reduce the business rates or that there was a specific scheme to apply for a rate reduction on the basis of financial hardship. I consider this to be fault and meant Mrs X missed the opportunity to make an application
28. I consider that Mrs X would have made an application for hardship relief if the Council had provided details of this scheme. However, I cannot say whether or not she would have been successful as the scheme requires an applicant to show not just financial hardship but that it is in the interests of the community for the Council to apply relief. Therefore, I cannot recommend the Council grants hardship relief but it should now consider an application from Mrs X if she wishes to make one.

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Agreed action

29. To remedy the injustice caused to Mrs X as a result of the Council’s fault in this case the Council will, within one month of my final decision, take the following action:
• Apologise to Mrs X;
• Provide Mrs X with details of the hardship scheme and how to apply. Consideration of any application should be determined based on the circumstances as of July 2020 and should be carried out by someone with no previous involvement in this case; and
• Ensure staff within the business rates section are aware of the hardship relief scheme and how to appropriately refer rate payers to it.

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Final decision

30. I have completed my investigation with a finding of fault for the reasons explained in this statement. The Council has agreed to implement the actions I have recommended. These appropriately remedy any injustice caused by fault.

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Investigator's decision on behalf of the Ombudsman