Summary: Mr X complained the Council wrongly refused to pay him a Small Business Grant causing financial difficulties. We found no fault in the Council’s decision making that affected the outcome, but we found fault in its communications. We recommended the Council provide an apology to Mr X, pay him £300 for distress and uncertainty, £100 for time and trouble and act to prevent recurrence.

The complaint

1. Mr X complains the Council wrongly refused to pay him a Small Business Grant causing financial difficulties.

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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 consider whether there was fault in the way an organisation made its decision. If there was no fault in the decision making, we cannot question the outcome. (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. 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

6. I spoke to Mr X and I reviewed documents provided by Mr X and the Council.
7. I gave Mr X and the Council an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

VOA

8. The Valuation Office Agency (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.
9. For each property on the rating list a council will record the person or body responsible for paying business rates; the ratepayer. Councils are not expected to proactively check with thousands of business es each year as to whether the ratepayer has changed. Rather it is up to a business to notify the council of any changes.

Liability for business rates

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

13. 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
14. If you use more than one property, you can keep getting any existing relief on your main property for 12 months after acquiring your second property.
15. 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)

Business grants

16. 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).
17. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
18. Businesses, which on 11 March 2020 would have received the Expanded Retail Discount were eligible for a Retail, Hospitality and Leisure Grant.
19. Funding was payable to the person recorded as the ratepayer in respect of the business on 11 March 2020. However, where a council had reason to believe the information they 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.
20. The Government publicised the grant schemes in the news, media and on Government websites. Most councils also published details on their websites.
21. The grant schemes closed in August 2020.

Principles of Good Administrative Practice

22. In 2018 the Ombudsman published a guidance document setting out the standards we expect from bodies in jurisdiction “Principles of Good Administrative Practice”. We issued an addendum in response to the COVID-19 pandemic; “Good Administrative Practice during the response to Covid-19”. This shows we expected similar standards from councils, even during crisis working. This includes:
• Providing clear and timely information on how and when to appeal or complain.
• Making complaints procedures clear and visible.
• The basis on which decisions are made and resources allocated, even under emergency conditions, should be open and transparent. Any new criteria, thresholds and timescales should be clear to service users and staff.
• Where new or adapted policies and procedures are brought in, ensure frontline staff are clear about any new expectations so they give the right advice to service users.
• Ensure you have a clear framework for fair and consistent decision making and operational delivery.

What happened

23. Mr X says his landlord notified the Council when he moved into his property in May 2019. However, the Council denies receiving notice of occupation prior to May 2020.
24. In February 2020 the Council sent a letter to the property seeking confirmation of occupation. It also sent a business rates notification letter.
25. The Council has confirmed that on 11 March 2020 it recorded a third party as the ratepayer at the property.
26. In May 2020 the Council received a response to its February correspondence. This said Mr X, trading as company A, occupied the property under a tenancy agreement from May 2019. The Council also received a completed business rates form with the same information.
27. In June the Council asked Mr X for a copy of his lease so it could update its records. It also asked him to confirm he occupied only one property so that it could consider applying SBRR.
28. Mr X says he sent a copy of his lease by post in June. However, the Council says it did not receive this.
29. In September Mr X emailed the Council to confirm he only occupied one property.
30. The Council then asked Mr X to provide his lease, proof of rents/deposit paid and any paid utility bills by 25 September for it to amend the rates’ liability. The Council did not explain why it needed more information than previously requested.
31. Mr X sent the Council a copy of his lease by email of 1 October and said he sent a copy by post the previous week. He said he hoped to hear from the Council regarding a business grant.
32. Upon receiving the lease the Council made company A liable for rates and applied SBRR backdated to May 2019.
33. In October the Council asked Mr X for copies of invoices and utility bills to prove occupation. It again asked him to confirm he only occupied one property. The Council has not explained why it needed this further information, given it had already applied SBRR. Or explained why this differed from its previous request.
34. Mr X sent the Council copies of invoices and confirmed he occupied only one property. He asked the Council to update its records so he could apply for a small business grant.
35. The Council says it then told Mr X it received notification of occupation in May 2020 and so the company was not eligible for a grant. The Council does not have a copy of this correspondence.
36. The Council says it received further communications from Mr X and his representatives requesting a grant. It says on each occasion it explained he was not eligible.
37. In October Mr X’s brother complained on his behalf that he had provided all the documents requested; the Council had delayed updating its records and it should pay the grant. Further, that it had not told him of any deadlines previously.
38. In its response of 27 October the Council said:
• Businesses had to be on the rating list and in receipt of SBRR on 11 March 2020 to qualify for the small business grant. However, it allowed a grace period until 22 June for businesses to come forward and notify them of occupation prior to March 2020.
• Its records showed Mr X submitted an occupation form in May 2020.
• On 16 June it requested a copy of the lease to register the business on the system. It received no reply so requested this from the landlord, again receiving no reply.
• Mr X did not contact the Council until September to confirm this was his only business premises but no lease was attached to the email.
• It requested the lease, proof of rent paid and proof of the business being active via receipts and invoices by 25 September. It finally received the lease on 1 October.
• The closing date for applications for the grant was 22 June. It had already granted an extension to 25 September.
• After 25 September it should have told Mr X his business was not eligible to apply however the officer dealing with the application continued to grant extra time to Mr X to get his evidence in. A further email was sent on 5 October requesting receipts and utility bills, the latter of which it now understood were included in the rent. Invoices were provided on 16 October.
• To date it had not received proof of rent paid or any business receipts as requested. It needed these to establish his business was active and trading on 11 March 2020. It could find no trace of the business other than a Facebook entry. Further the business is shown as 'dormant' on Companies House from 2017 to date, as no accounts have yet been submitted for 2019.
• It could not consider the business for a grant at this late stage. It would not allow further time to provide the information as all grant application deadlines had now passed.
39. In April 2021 Mr X’s MP complained to the Council on his behalf. She said:
• Mr X had not been able to access grants due to the Council’s delay registering his business.
• Mr X notified the Council of his occupation in May 2020 and provided his lease. Mr X has also provided supporting documents to the Council, including proof of rents paid, utility bills, and sales invoices.
• Mr X is concerned the Council requested trading documents and invoices, which other companies in similar circumstances were not asked to provide, causing further delay to his grant application.
40. The Council responded in May:
• Its enquiries were not yet complete.
• It had applied SBRR but needed more evidence to pay the small business grant.
• Mr X was not the recorded ratepayer on 11 March 2020 and it was unaware of his occupation until May 2020.
• At its discretion it adopted a pragmatic approach for small businesses which were two or three months late in notifying occupation before 11 March 2020. However, Mr X was a year late - it would be exercising very considerable discretion to authorise a grant in this situation. There is a very strong likelihood that the Government would have refused to reimburse the Council.
• Plus Companies House recorded Mr X’s business as dormant and its accounts were overdue - that would need to be addressed first.
41. In July 2021 Mr X complained to the Council that it wrongly refused him the grant and delayed replying to his MP.
42. The Council told Mr X it replied to his MP in May. It repeated the points already made and confirmed this was its final position.
43. Mr X says he later took legal advice and was told to contact the Ombudsman.
44. In response to enquiries the Council said the key reason for its refusal to award a small business grant, was the very late notification of occupation. It could exercise discretion to backdate small business rates relief because the rules for this were significantly less prescriptive.
45. The Council also said as part of the registration process for business rates, it had to be satisfied of the correct company name and that it was actively trading. It therefore made checks against Companies House records.
46. In comments on a draft decision the Council said:
• It did not treat contacts in October 2020 or April 2021 as complaints and therefore did not signpost Mr X to the Ombudsman;
• The period over which it managed COVID grants were not normal times, with Government schemes brought in late, internal resources diverted, and guidelines changing mid scheme. The Council received many requests with backdated occupation details, with evidence supplied by ratepayers much later to take advantage of the grant schemes.

Findings

47. Mr X could have contacted the Ombudsman within 12 months of the Council’s refusal of the grant in October 2020. However, as the alleged fault and injustice has been ongoing I consider there is good reason to investigate the complaint.
48. I have not seen any evidence to support Mr X’s assertion the Council knew or should have known he occupied the property before May 2020. I therefore find no fault by the Council in this respect.
49. Mr X was not the recorded ratepayer and in receipt of SBRR on 11 March 2020. Therefore, he was not entitled to a small business grant unless the Council decided to exercise discretion.
50. In correspondence to Mr X in October 2020 the Council said it exercised discretion to allow a grace period until 22 June 2020 for businesses to come forward and notify of their occupation. This would allow it to consider if they should be recorded as ratepayer and eligible for a grant. However, it later allowed Mr X until 25 September 2020 to evidence occupation. This contradicts the Council’s position in correspondence of May 2021 and in response to the Ombudsman’s enquiries, that it would not exercise discretion in Mr X’s case as he was more than one year late in notifying of occupation. I therefore consider the Council’s decision making was neither clear nor transparent. This is fault. This caused Mr X distress and uncertainty. This is injustice. However, I cannot say this fault affected the decision outcome, because Mr X did not provide the evidence requested by 25 September in any event.
51. While I acknowledge councils were working in unprecedented times, under great pressure, we still expected open and transparent decision making with clear criteria for both service users and staff.
52. The correspondence shows the Council made requests for further evidence inconsistently, without explanation and without setting clear deadlines. This is fault. This caused Mr X distress and uncertainty. This is injustice. However, I cannot say this fault affected the decision outcome for the reasons given above.
53. We expect councils to keep records of key decisions yet it does not have a copy of its initial decision to refuse Mr X a grant. This is fault.
54. We expect councils to make clear how someone can escalate a matter, whether through a complaint, appeal or to the Ombudsman. However, the Council did not tell Mr X how to progress concerns raised in October 2020 or in April 2021. And it did not signpost him to the Ombudsman when giving its final response. This is fault. Mr X was put to avoidable time and trouble seeking out the next steps to take. This is injustice.
55. The Council’s response of April 2021 suggested its enquiries were ongoing and it was still possible for Mr X to provide evidence to support a grant. However, it is clear from the Council’s response to enquiries this was not correct. This is fault. Mr X suffered further distress and uncertainty as a result. This is injustice.

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Agreed action

56. To remedy the injustice set out above the Council should take the following actions within one month:
• Provide Mr X with a written apology;
• Pay Mr X £300 for distress and uncertainty;
• Pay Mr X £100 for time and trouble;
• Remind staff they must refer contact to the complaints team for them to provide a final resolution and signpost service users to the Ombudsman where appropriate.
57. The Council has accepted my recommendations.

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Final decision

58. I find fault in the Council’s communications with Mr X causing injustice. The Council has accepted my recommendations I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman