Summary: Mr X complained the Council delayed deciding on his eligibility for business rates’ relief resulting in his missing out on a business grant. We found fault in the Council’s actions causing Mr X injustice. We recommended the Council apologise to Mr X, pay him £300 for time and trouble, £300 for distress and uncertainty and, £10,000 in lieu of the grant. Further, that it acts to prevent recurrence.

The complaint

1. Mr X complains the Council delayed deciding on his business’ eligibility for Small Business Rates Relief meaning he missed out on a Small Business Grant.

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The Ombudsman’s role and powers

2. 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)
3. We cannot question whether an organisation’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. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, 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 an organisation’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 spoke to Mr X and I reviewed documents provided by Mr X and the Council.
8. I gave Mr X and the Council an opportunity to comment on my draft decision. I considered any comments before making a final decision.

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What I found

Valuation Office Agency

9. The Valuation Office Agency (“VOA”) provides valuations and property advice. It compiles and maintains lists detailing the rateable value of 1.9 million commercial properties for business rates; the VOA rating list.
10. Councils decide on the liable ratepayer for any property on the rating list.

Liability for business rates

11. The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer:
• occupiers
• owners, and
• persons named in central rating lists.
12. 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.
13. 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.

Small Business Rates Relief

14. Government guidance on Small Business Rates Relief (“SBRR”) says you can get small business rate relief if:
• your property’s rateable value is less than £15,000 and
• your business only uses one property
15. If you use more than one property, you will keep getting any existing relief on your main property for 12 months after acquiring your second property and you can still get small business rate relief on your main property after this if:
• none of your other properties have a rateable value above £2,899 and
• the total rateable value of all your properties is less than £20,000 (£28,000 in London)

Grant Funding Schemes

16. In response to the COVID-19 pandemic the Government initially introduced two business grant schemes. In March 2020 the Department for Business, Energy and Industrial Strategy published guidance for councils on how to apply these: “Grant Funding Schemes”.
17. Of relevance to this case, businesses which on 11 March 2020 were eligible for SBRR were eligible for a payment of £10,000; a Small Business Grant.
18. Funding was payable to the person recorded as the ratepayer on 11 March 2020. However, where a 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.
19. A council had to ignore any changes to the VOA rating list after 11 March, including backdated changes. However, where it was factually clear to a council on 11 March that the rating list was inaccurate on that date, it could withhold the grant and/or award the grant based on its view of who would have been entitled to the grant had the list been accurate.

What happened

20. On 11 March 2020 Mr X was the recorded ratepayer at property A and in receipt of SBRR.
21. In April 2020 the VOA split property A into two units backdated to 2017. It removed property A from the rating list and created two new entries, unit A and unit B.
22. On 29 April 2020 Mr X applied for a Small Business Grant at property A as this was the only business rates account open at the time. However, he says at the same time he applied for SBRR at unit A, to cover all bases.
23. The Council refused Mr X a grant at property A as it was no longer on the rating list.
24. I asked the Council to comment on its decision with reference to the Government guidance that it should ignore any changes to the VOA rating list after 11 March.
25. In response the Council referred to the guidance which said:
26. “In cases where it was factually clear to the Local Authority on the 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.”
27. However, the Council provided no evidence that it was factually clear to it on 11 March that the rating list was inaccurate on 11 March.
28. The Council recorded Mr X as the ratepayer at unit A and unit B. It then refused his request for SBRR at unit A as he was no longer eligible (given his occupation of two properties).
29. In response to enquiries the Council said it recorded Mr X as ratepayer of both units as he owned the property.
30. In May 2020 Mr X disputed that he was liable for unit B as this was occupied by someone else. He sent further emails to the Council in June, July and August disputing liability but received no reply.
31. In response to enquiries the Council said it did not reply to Mr X because it was awaiting further information from a third party as to whether they may be liable. Further, that Mr X did not provide any evidence that he let the property and was receiving rent. Had he done so this may have been sufficient to amend the records. It acknowledged it did not ask him for such evidence but suggested he should nonetheless have been proactive in providing this.
32. The grant schemes closed in August 2020. The Council says the final date for any payments was 30 September 2020.
33. In October 2021 Mr X complained to the Council that it had still not rectified the business rates account for unit B.
34. In response the Council apologised for its delay. It confirmed it had now closed the account on unit B in his name and transferred it to the current occupier. It had also now awarded SBRR on his account for unit A.
35. Mr X then complained to the Council that he applied for a business grant in 2020 but this could not be processed as the Council did not split the units within a reasonable time. Now that the Council had rectified the accounts he wanted it to pay him the grant.
36. The Council responded to say Mr X had applied for a grant at property A but it could not pay this because the VOA removed it from the rating list in April 2020. It then held Mr X liable as ratepayer on two units and so he was not eligible for SBRR or a grant. It did not have enough evidence to amend its records before the closing date for grant applications and payments. Its delays after 30 September 2020 had no bearing on this.
37. Mr X told the Council it had enough time to amend the accounts before 30 September.
38. In response, the Council acknowledged delays handling correspondence between July and September 2020, for which it apologised. But said this delay was not directly responsible for its decision to refuse his grant application. It did not receive the correct information to determine who occupied unit B until the end of 2020. As the landlord, if Mr X had provided copies of leases and proof of rent this would have been a straightforward process. It referred him to the Ombudsman should he remain unhappy.
39. Mr X then complained to the Ombudsman.
40. I asked the Council for a chronology of contacts with Mr X, actions taken on his account and an explanation for any delays. The Council’s chronology and supporting documents did not cover the period from November 2020 to October 2021.

Findings

41. I am satisfied Mr X’s complaint and any injustice has been ongoing since April 2020 and I therefore consider he complained to the Ombudsman in time.
42. In light of the Government guidance the Council should have decided on a Small Business Grant for property A based on the information it held on 11 March 2020. It had to ignore any changes to the VOA rating list after that date unless it knew on 11 March 2020 that the rating list was inaccurate.
43. On the information I have seen, on 11 March the Council held information that Mr X was the ratepayer at property A and in receipt of SBRR. It therefore should have awarded Mr X a grant based on this information. The Council has not provided any evidence that it knew on 11 March the VOA rating list was factually inaccurate. Rather, it appears the Council took account of changes to the rating list that occurred after 11 March 2020, contrary to Government guidance. The Council has provided no good reason for deciding contrary to Government guidance. I therefore find fault in its decision making.
44. Because of this fault Mr X missed out on a Small Business Grant at property A. This is injustice. I recommend the Council remedies Mr X’s injustice by paying him £10,000. As the business grant schemes have since ended, I do not consider a service improvement recommendation is necessary.
45. The Council initially decided to hold Mr X as the liable ratepayer at units A and B because he owned the property. I find no fault in it reaching this decision. However, upon Mr X disputing occupation, the Council did not respond to Mr X or tell him what evidence it required to amend its records, in a timely manner or at all. This is fault. Although the Council awaited information from a third party this was not necessary; it could have asked Mr X for the information it needed.
46. Because of the Council’s fault Mr X lost the chance to correct the Council’s records and apply for a Small Business Grant at unit A before the grant scheme closed. This is injustice. I will recommend the Council remedies Mr X’s injustice. As the fault appears limited to this case I will not make a service improvement recommendation.
47. The Council then further delayed updating its records of the ratepayer from the end of 2020 until Mr X complained in October 2021. This is further fault.
48. Because of the Council’s fault Mr X was put to avoidable time and trouble in seeking to resolve this with the Council over an extended period. I am also satisfied he suffered distress and uncertainty throughout. Not only because he was unsure whether he would finally receive a grant payment but also because he was unsure if the Council would pursue him for business rates on unit B. This is injustice. The Council has offered no explanation for this delay or outlined any action to prevent recurrence.

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Agreed action

49. To remedy the injustice set out above I recommend the Council carries out the following actions within one month of the date of my final decision:
• Provide Mr X with a further written apology;
• Provide Mr X with an explanation for its delay in updating its record of the ratepayer at unit B from the end of 2020 until October 2021. And, outline action taken to prevent recurrence of such delay in future or explain why it does not consider any action necessary.
• Pay Mr X £300 for time and trouble;
• Pay Mr X £300 for distress and uncertainty;
• Pay Mr X £10,000, for the small business grant he missed out on.
50. The Council has accepted my recommendations.

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Final decision

51. I found the Council at fault in its handling of Mr X’s claims for a business grant and rates’ relief. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman