Summary: Mr X, on behalf of his mother Mrs Z, complained the Council’s request for the repayment of a Small Business Grant is based on incorrect information and the repayment will cause financial hardship. The Council gave Mr X the opportunity to provide evidence the premises were occupied and the business trading on 11 March 2020 but the Council was not satisfied this was the case. There is no fault in how the Council reached its decision.

The complaint

1. Mr X, on behalf of his mother Mrs Z, complained the Council’s request for repayment of a Small Business Grant is based on incorrect information.
2. Mr X says the repayment of the grant will cause significant financial hardship.

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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. 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)

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How I considered this complaint

6. 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 invited their comments.

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What I found

7. Small business rate relief (SBRR) is applied if business premises have a rateable value of less than £15,000 and, in most cases, if the business uses only one property.
8. If relief is applied, then any business with premises with a rateable value of less than £12,000 will pay no business rates.
9. The relief can only be paid on occupied premises. Rating law has established four key tests to decide if premises are occupied. Of relevance to this complaint, one of the tests is that premises must be in ‘actual occupation’ by the ratepayer; i.e. being used by the ratepayer in conduct of their business.

Small Business Grant Fund

10. In March 2020, in response to the COVID-19 pandemic, the government created schemes for councils to pay grants to small businesses. These included the Small Business Grant Fund (SBGF).
11. To receive funding from the SBGF a business had to be in receipt of small business rate relief (SBRR) or rural rates relief. Eligible businesses would receive a grant of £10,000.
12. Government guidance on eligibility for the SBGF scheme said:

• “Any changes to the rating list (rateable value or to the hereditament) after 11 March 2020 including changes which have been backdated to this date should be ignored for the purposes of eligibility.
• Local authorities are not required to adjust, pay or recover grants where the rating list is subsequently amended retrospectively to 11 March 2020.
• In cases where it was factually clear to the Local Authority on 11 March 2020 that the rating list was inaccurate on that date, Local Authorities may 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.
• This is entirely at the discretion of the Local Authority and only intended to prevent manifest errors”.

13. Government guidance for Local Authorities on the business grant schemes stated it will not accept deliberate manipulation and fraud - and any business caught falsifying their records to gain additional grant money will face prosecution and any funding issued will be subject to claw back, as may any grants paid in error.

Key facts

14. Mrs Z owns and runs a convenience store. On 11 March 2020, the Council’s records showed Mrs Z was in rateable occupation of the shop premises and in receipt of small business rate relief. As a result, the Council awarded the Small Business Grant of £10,000.
15. In May 2020, the Council received an anonymous telephone call saying the shop premises had been vacated, that it was not trading and for sale. The Council says this prompted it to make further enquiries.
16. The Council says as there was an estate agent board displayed on the building, it made enquiries to the agent. The agents advised that their records showed the building had been vacant since February 2020. The Council said this prompted it to make further enquiries as there is no entitlement to small business rate relief or the Small Business Grant if the premises are unoccupied.
17. An officer visited the premises and found the roller shutters on the windows and door were closed. The Council says this prompted it to ask Mrs Z to provide evidence to show she was still trading.
18. In response to the Council’s requests for further information, Mr X emailed the Council in August 2020. He attached photographs of what he called delivery notes. He also said they were in the process of selling the shop and that his mother is opening the shop intermittently. He said the stock was being run down and trade was only about £30/40 a week.
19. The Council says it was not satisfied with the evidence provided. It says one invoice related to another business in the area but did not include the necessary VAT registration number and so it had concerns about its validity.
20. The Council also contacted a wholesaler in respect of another invoice submitted by Mr X. It says the wholesaler rang the Council in October 2020 and advised that while the stationary was genuine, the date on it was a Sunday and its agents do not work at weekends. It said the name and signature are not that of its local agent. It said the costs for the different confectionary items are not the correct values for the products. It also told the Council that the tracking device on the local agent’s vehicle was checked and showed he was not near the shop premises on that date. The wholesaler also said the serial number on the document was far removed from the sequence of receipts used by the local agent in 2020. It said while it previously supplied the shop, its last visit was in 2019.
21. The Council says the items on two of the invoices provided were not items that a convenience store would normally buy for resale purposes. The invoices showed 2 x director chairs, a single bottle of shower gel, a single bag of pulses, a table, a gazebo and a showerhead.
22. The Council said this evidence did not persuade it the shop was occupied and trading both on and after 11 March 2020. It therefore asked to seek extracts of the shop’s sales/purchase ledger and bank statements for the business account covering the period 1 February 2020 to 31 May 2020. Mr X did not provide any bank statements. He provided copies of handwritten sheets showing the weekly amounts taken.
23. An officer visited the shop on 17 November 2020. He found the shutter up on the door and the lights on. The officer entered the shop and noted the only items for sale were a few wine bottles on a high shelf.
24. Mr X made a complaint at stage one of the Council’s complaints procedure. In its response dated 26 January 2021 the Council said that since May 2020 he had been asked to demonstrate the business was trading throughout 2020. It explained the requests were made because the business rates team received information indicated the business was no longer trading. The letter set out the Council’s position regarding the information submitted by Mr X and why it did not consider this showed the shop to have been trading since 11 March 2020. The Council’s position remained that the grant should be repaid.
25. Mr X contacted the Council again on 13 September 2021. He apologised for not replying sooner and said he had just found the stage one response in his spam folder. Mr X said that he had always responded to the requests for information but considered the Council’s requests were a moving target and that it never provided a clear list of what information was required.
26. Mr X said he provided details of the potential buyers who visited the shop during opening hours. Mr X provided a letter from the estate agent advising it wrongly initially stated the shop was vacant. Mr X said the officer told him he had never visited the shop but when he drove past in the morning the shutters were down. Mr X explained his elderly mother, Mrs Z, could not open the window shutters but did open the door shutter.
27. Mr X gave an explanation regarding the handwritten accounts and said it was not up to the Council to question how they operate. Mr X said the shop was closing down and they were running down remaining stock which was mainly high value items such as wine and cigarettes. Mr X said he hoped this would clarify his position and the Council would see the decision to recover the grant was incorrect.
28. The Council completed a stage two investigation. It concluded the Council had given Mr X many opportunities since May 2020 to provide evidence to show that this business is still trading. It said it agreed with the decision that the grant should be repaid because he had not provided sufficient information to show that his mother’s business is still trading.

Analysis

29. This complaint concerns the Council’s request that Mrs Z should repay the £10,000 small business grant. The Council takes this view because it is not satisfied the premises were occupied on 11 March 2020 and therefore Mrs Z was not eligible for Small Business Rate Relief or the Small Business Grant. The Council had the right to recover any grants paid in error.
30. The Council’s records on 11 March 2020 showed Mrs Z was in rateable occupation of the shop premises and in receipt of Small Business Rate Relief. Based on this information the Council paid Mrs Z the Small Business Grant. There is no fault in this decision as at that time the Council did not have any information to suggest this was wrong.
31. After receiving an anonymous telephone call about the shop, the Council investigated the situation further. I am satisfied the Council was entitled to do this. The Council gave Mrs Z, and her son Mr X on her behalf, the opportunity to submit information to show the premises were occupied and the business was trading. The information considered by the Council included information from the estate agents selling the property; receipts and invoices provided by Mr X; information from a supplier named in one of the invoices provided by Mr X; utility bills; evidence from visiting the premises; the handwritten income sheets and the comments made by Mr X.
32. I am satisfied the Council has considered all relevant information and has given clear reasons for its decision. The Council’s investigation concluded that on 11 March the premises were not occupied and being used by Mrs Z to conduct her business. It therefore decided she was not entitled to the small business rate relief or the small business grant.
33. It is not the Ombudsman’s role to make a decision on behalf of the Council or provide a route of appeal against its decisions. In this case, the Council has considered the information presented to it and taken a view. As there is no evidence of fault in the process leading to the decision, there is no basis for me to criticise the decision made even though Mr X may disagree with it.

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Final decision

34. I will now complete my investigation as there is no evidence of fault in this case.

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Investigator's decision on behalf of the Ombudsman