Summary: Mr X complained about the Council’s decision to refuse his business a COVID-19 grant. There was no fault in the Council’s consideration of Mr X’s request for a COVID-19 business grant. The Council was at fault for delays responding to Mr X’s complaint, but its apology is sufficient remedy for any injustice.

The complaint

1. Mr X complained about the Council’s decision to refuse his business a COVID-19 grant.
2. Mr X said the Council was at fault for not keeping up-to-date information about his business property or ensuring it was registered for business rates. He also said the Council failed to consider exercising its discretion to award the grant when it learnt the non-domestic rating list was wrong.
3. Mr X also complained about the Council’s decision not to award small business rates relief for his property, and its decision to remove small business rates relief from another property Mr X had an interest in.

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The Ombudsman’s role and powers

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. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word fault to refer to these. We consider whether there was fault in the way an organisation made its decision. If there was no fault in how the organisation made its decision, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
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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What I have and have not investigated

7. I did not investigate Mr X’s complaint about eligibility for small business rates relief. That is because the Council updated Mr X’s account and applied the relief after the Valuation Agency Office backdated the entry on the non-domestic rating list.
8. I have also not investigated details about another property Mr X had an interest in. Again, that is because the Council has updated the account.

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How I considered this complaint

9. As part of the investigation, I considered the complaint and the information Mr X provided.
10. I made written enquiries of the Council and considered its response along with relevant law and guidance.
11. Mr X and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

COVID-19 grants to businesses

Small business grants and retail, hospitality and leisure grants

12. In March 2020, the government created schemes for councils to pay grants to small businesses and retail, hospitality and leisure businesses. This was because the COVID-19 restrictions affected so many of them.
13. A business’ right to a grant depended on its rateable value on the business rating list and its eligibility for certain business rate reliefs on 11 March 2020. Government guidance states later changes to the rating list, even if they were backdated to 11 March 2020, did not entitle a business to a grant. A council could make an exception if, on 11 March 2020, it already had good reason to believe the rating list was inaccurate for a particular address or business.
14. The Valuation Office Agency (VOA), not the council, compiles the rating list and decides on liabilty for business rates and rateable values. We cannot investigate complaints about the VOA’s decisions.

What happened

15. I have summarised below some key events leading to Mr X’s complaint. This is not intended to be a detailed account of what took place.
16. Mr X wrote to the Council on 25 March 2020 stating his property should be on the business rating list as a holiday let. He followed this up with an email on 26 March, stating he should be claiming COVID-19 grants.
17. Mr X telephoned the Council’s revenues department on 30 March 2020 to discuss this. The Council told Mr X it would send a report to the VOA asking them to remove his property from council tax banding and enter it onto the non-domestic rating list. The Council told Mr X that, as he already had a property on the non-domestic rating list, he would lose his small business rates relief. It told him he was not eligible for a COVID-19 grant for his holiday let property because it was not on the non-domestic rating list on 11 March 2020. It told him this was the Government’s eligibility criteria.
18. Mr X emailed the Council on 31 March advising his holiday let property should be placed onto the non-domestic rating list from 1 January 2020. The Council included this date on the report it sent to the VOA.
19. Mr X contacted the Council in April 2020 asking why he was not eligible for a COVID-19 grant. The Council confirmed the eligibility date of 11 March 2020 and sent Mr X information from the Government about the eligibility criteria.
20. Mr X threatened the Council with legal action. He asked for records from 2008 onwards and said the Council was responsible for the error of his property not being on the non-domestic rating list. He also disagreed with the Council’s interpretation of the Government guidance on COVID-19 grants. He said the Council has discretion where it knows it is responsible for the mistake on the rating list, and this is not time sensitive.
21. Mr X wrote to the Council on 7 April. He said he could prove the Council and HMRC should have been aware he used his property as a business. He also said an implied contract exists with the Council, and it failed in its duty of care towards him. He said the Government guidance was intended to stop people who tried to avoid business rates or knowingly stayed on the incorrect rates. He said where a rate payer acts honourably, and it is the Council or HMRC’s error, the Council should pay the grant.
22. The Council told Mr X it passed his query to its legal department to consider.
23. Mr X wrote to the Council on 27 May 2020 with what he said was a pre-action protocol letter before he started a County Court claim.
24. The Council’s legal department wrote to Mr X on 22 June. It said HMRC and the VOA are separate entities from the Council and Mr X should contact them directly with any complaints about their actions. The Council said the COVID-19 grant was dependent on eligibility criteria which Mr X did not meet, as his property was not on the non-domestic rating list on 11 March 2020. It said Government guidance was clear that backdated changes should be ignored.
25. The Council recognised it had discretion to depart from this where it knew the rating list was wrong. It said it had not used its discretion because it did not consider that it should. It pointed to the following factors it considered as part of this decision:
• It must use public funds responsibly.
• It sent council tax bills each year, providing Mr X the opportunity to get in touch about the error.
• Mr X had another similar business property which he paid business rates for during the relevant period. He also changed a holiday accommodation property back to a council tax paying property.
• It sent Mr X two forms in 2010 asking about the use of the property, but he did not return them.
• Mr X made a significant financial benefit from only paying council tax, instead of the more costly business rates, between 2009 and 2020.
26. Mr X emailed the Council in September 2020, disputing a demand for business rates. He accused the Council, HMRC and the VOA of being misleading and breaching GDPR. He said he obtained a different valuation to the one made by the VOA.
27. The Council said the VOA sets property valuations and it had no role in this. It said the VOA is a separate authority and Mr X must challenge the valuation with them.
28. Mr X emailed the Council in November 2020, continuing to assert the Council withheld a COVID-19 grant he was eligible for. He said the Council was insisting on repayment of business rates when he has no income as his business was closed due to COVID-19.
29. The Council repeated Mr X was not eligible for the COVID-19 grant. It offered Mr X a payment plan for his business rates bill.
30. Mr X complained to the Ombudsman in April 2021. We referred the complaint to the Council as Mr X had not completed its complaint process.
31. Mr X complained to the Ombudsman again in January 2020. We sent the complaint back to the Council as there was still no final complaint response.
32. Mr X wrote to the Council on 21 March 2023. He said the Council failed to respond or escalate his complaint from over 12 months ago.
33. The Council sent its final complaint response on 30 August 2023. It apologised for the delay. It said his letter was not marked as a complaint and was therefore not passed to the complaints team.
34. The Council said Mr X’s property was removed from council tax banding with effect from 1 January 2020 and entered into the non-domestic rating list. This followed the Council’s report to the VOA in April 2020. The VOA confirmed it had backdated the entry into the rating list to April 2017. The Council said this was done independently by the VOA and Mr X must challenge this with them if he disagrees.
35. The Council confirmed its position on the COVID-19 grant remained unchanged. As Mr X’s property was not on the rating list on the eligibility date of 11 March 2020, he did not qualify for a payment. It said the more recent changes to the rating list by the VOA did not change this, as the grant scheme excluded retrospective changes.

My investigation

36. The Council told me it refused to pay Mr X the grant as it was unaware his property was a holiday let until Mr X told its revenues department on 26 March 2020. Government guidance states a business had to be on the rating list on 11 March 2020 to qualify for the grant.
37. The Council said the property had been on the council tax banding list since 1993. The previous owner told the Council when they sold the property to Mr X in 2009. As the Council received no contact from Mr X it set up a tax account and issued a bill in June 2009. It also sent Mr X a survey form. The form asked what the property would be used for, including a section about holiday lets. Mr X paid the council tax bill and set up a direct debit but did not return the survey form. However, Mr X said he did not buy the property until September 2009, so he did not receive the survey form.
38. The Council said it issued a tax bill to Mr X in March every year since 2009. Mr X paid each time, so the Council had no reason to think the use of the property had changed.
39. The Council said the survey form is a standard one sent to new property owners. It asks for other information as well as business use, and the Council does not send it because it suspects someone is using a property for business purposes.
40. The Council said it has no access to HMRC records. Property valuations, for tax and business rates purposes, are carried out by the VOA. The Council had no way of knowing Mr X paid income tax on his property.
41. The Council said Mr X has other properties on the non-domestic rating list, including one he asked to be put back on the council tax banding list. He should therefore be aware of the difference and of the need for a business property to be on the non-domestic ratings list.
42. The Council said the only discretion it had under the grant scheme was if it had already been advised about a property or if it was in the process of being entered onto the rating list, but that was not the case.
43. The Council told me an officer contacted the planning department, environmental health department, and the licensing department to ask if they had any applications or any knowledge Mr X’s property was used as a business. All departments said they had no knowledge of this and there was no commercial waste contract in place.

Analysis

44. Under Government guidance, businesses had to be on the non-domestic rating list on 11 March 2020 to be eligible for a COVID-19 grant. Mr X’s business was not.
45. Mr X asked the Council to put his property on the non-domestic rating list on 25 March. At the same time, he enquired about a COVID-19 grant. The Council correctly told Mr X he was not eligible.
46. Mr X said the Council has discretion to award the grant where the Council was responsible for the mistake of a business not being on the rating list on 11 March 2020.
47. Mr X points to the fact HMRC were aware his property was a holiday let business, and that he paid income tax on the property for many years. Unfortunately, that is irrelevant here. The Council and HMRC are entirely separate entities, and the Council had no way of knowing Mr X paid income tax on the property. This is not something HMRC would routinely tell local authorities about.
48. Mr X also said other Council departments, such as its planning and environmental services, should have been aware his property was a holiday let business. The Council gave me evidence its revenue service checked with other departments, but there was no record of Mr X’s property being used as a holiday let.
49. I found the Council is not responsible for the mistake in this case. It was Mr X’s responsibility to tell the Council that his property was a holiday let business. I have not seen any evidence to suggest the Council had, or should have had, earlier knowledge the property was incorrectly still in the Council tax banding system. The onus was on Mr X to ensure his property was correctly listed for business rates. The Council does not have a duty to check all properties are correctly listed, and to expect this would impose a disproportionate burden on the Council.
50. I also found the Council’s legal department showed the Council did consider exercising discretion. It gave a list of reasons why it did not consider it should exercise discretion in this case.
51. I found no fault in the Council’s decision to refuse to award Mr X a COVID-19 business grant. Mr X may disagree with that decision, but I cannot question the merits of a decision which has been properly made.
52. Mr X threatened the Council with legal action, and wrote what he said was a pre action letter before court proceedings. I can therefore understand why the Council initially dealt with his concerns through its legal team instead of as a formal complaint. I can also understand why the Council said it had already fully dealt with Mr X’s concerns when he complained to the Ombudsman in January 2022.
53. However, the Council should have responded much sooner when Mr X sent a letter of complaint in March 2022. The situation did not change, so I do not consider Mr X suffered any significant injustice, but the delay is likely to have caused him frustration. The Council did apologise for the delay in its final response, and I consider that is suitable remedy.

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Final decision

54. I have completed my investigation. There was no fault in the Council’s consideration of Mr X’s request for a COVID-19 business grant. The Council was at fault for delays responding to Mr X’s complaint, but its apology is sufficient remedy for any injustice.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman