Summary: Mr X complained about the Council’s handling of his business rates account and its refusal to award rates relief and grants, causing him financial loss and stress. We found fault by the Council that did not affect decision outcomes but caused uncertainty. We recommended the Council provide an apology and act to prevent recurrence.

The complaint

1. Mr X complains the Council:
• delayed recording his business X as ratepayer at the Address;
• delayed in deciding business X would be liable for five units rather than one;
• wrongly refused all five units the Expanded Retail Discount and the Retail, Hospitality and Leisure Grant;
• wrongly refused four units the Local Restrictions Support Grant and;
• wrongly refused four units the Restart Grant.
2. Mr X says he would have given up a unit as necessary to claim Small Business Rates Relief and the Small Business Grant, had the Council advised the business was liable for rates on five units sooner. He has missed out on rates relief and grants, his business is in financial difficulty and, he has suffered distress in chasing the Council for responses.

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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. 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. We provide a free service, but must use public money carefully. We do not start or may decide not to continue with an investigation if we decide any fault has not caused injustice to the person who complained. (Local Government Act 1974, section 24A(6))
7. 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

8. I spoke to Mr X and I reviewed documents provided by Mr X and the Council.
9. 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

Rating list and ratepayer

10. 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.
11. A council will keep its own record of the ratepayer for each property on the VOA rating list. If the owner/occupier of a business changes, the council will not know to update its record of the ratepayer until updated by the previous/new owner/occupier.

Small Business Rates Relief (SBRR)

12. Gov.uk 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.
13. However, if your business uses more than one property, you will keep getting any existing relief on your main property for 12 months after acquiring your second property. 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)

Expanded Retail Discount (the “Discount”)

14. In 2019/20 the Government increased the availability of the business rates retail discount. In April 2020 MHCLG published guidance for councils on how to apply the Discount; “Business Rates, Expanded Retail Discount 2020/21: Coronavirus Response Local Authority Guidance”.
15. Each council was to adopt its own scheme and decide whether to grant the Discount, having regard to the guidance.
16. Of relevance to this case, the discount was available to shops used for the sale of goods to visiting members of the public. This included furnishing shops/ display rooms.
17. The discount was not available to businesses not reasonably accessible to visiting members of the public.
18. In response to enquiries the Council confirmed it did not have its own separate policy but applied the Government guidance.

Business grants

19. In response to the COVID-19 pandemic the Government introduced various grant schemes to support businesses. In March 2020 it introduced business support grants. Applications for these were open until 28 August 2020.
20. Businesses which, on 11 March 2020, received Small Business Rates Relief (“SBRR”) were eligible for a Small Business Grant of £10,000.
21. Businesses, which on 11 March 2020 would have received the Expanded Retail Discount, were eligible for a Retail, Hospitality and Leisure Grant.
22. 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.

Local Restrictions Support Grant (LRSG)

23. From September 2020 the Government introduced LRSGs.
24. Eligible businesses were those the Government had ordered to close.
25. The grants were not available to businesses that could continue to trade because they did not depend on providing direct in-person services from their premises and could operate their services effectively remotely.

Restart grant

26. In March 2021 the Government introduced a restart grant for non-essential retail, hospitality, accommodation, leisure, personal care and gym businesses.
27. The primary aim was to support businesses that offered in-person services, where the main service and activity took place in a fixed rate-paying premises.

Principles of good administrative practice

28. 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 says decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.

What happened

29. Mr X runs business X at the Address. Mr X says initially the Council recorded a director, Mr Y, as ratepayer for one unit at the Address.
30. The Council says on 11 March 2020 it recorded various third parties as the ratepayers across units 1 to 5 at the Address. This included Mr Y at unit 5. It confirmed the VOA had recorded five separate units on its rating list at the Address for many years.
31. The Council says it had no reason to believe its record of the ratepayer was inaccurate until 6 April 2020. On this date a third party told the Council that business X had occupied units one to five at the Address since May 2019.
32. When I spoke to Mr X he confirmed he had not asked the Council to update its records earlier.
33. The Council has provided copies of correspondence exchanged with a third party. I cannot disclose this for confidentiality reasons. However, in brief, it shows the Council sought evidence to support the request for a change in ratepayer at the Address. The Council did not receive the information required until 15 September at earliest.
34. On 27 August Mr X applied for a business grant for business X at the Address. On the form he recorded that Mr Y was the ratepayer.
35. On 28 August the Government closed the business grant schemes.
36. On 30 September the Council wrote to Mr X refusing a grant as he had not met the criteria. It suggested some general reasons for refusal but did not specify which reason it relied on in his case.
37. The Council says it did not receive the information needed to update its records of the ratepayer at the Address until November 2020.
38. On 10 November Mr X complained to the Council it was wrong to refuse a grant on the grounds Mr Y was no longer a director of business X, as Mr Y did not complete the application. Further, that the Council had delayed updating its record of the ratepayer.
39. The Council has provided case notes dated 16 November. These show it received a phone call from a third party to say business X held the lease on units 1 to 5 at the Address and should be named as ratepayer. The Council noted none of the units were eligible for SBRR and as business X was primarily an online store, with the units used for storage, neither the SBG or RHLG applied. In response to my enquiries the Council could not say where it gathered this information but suggested it was from the call. It added that Companies House recorded business X as a wholesaler.
40. The Council addressed Mr X’s complaint on 19 November. It explained:
• Business X was the liable ratepayer at units 1 to 5 at the Address.
• None of the units were entitled to SBRR as two had a rateable value over £2900.
• Business X was primarily an online store, with units used for storage. Therefore, it was not entitled to a business support grant.
• The grant schemes closed on 28 August 2020.
41. Mr X then applied for the ERD.
42. The Council asked Mr X for evidence the business was retail and open to the public.
43. Mr X sent the Council:
• A photo of the shop front which included a sign “open to public”.
• A screenshot of its online listing.
• A leaflet reporting its trading hours and advertising its showroom for visits.
44. The Council asked for further evidence that the shop entrance was accessible to the public and that they could walk round the shop browsing products. It also asked for proof of trading.
45. The Council then inspected the units. Its record of the visit says:

“Special visit returned from inspector with pictures taken of the premises which confirms the unit premises is a storage place with goods delivered as and when needed. Premises is not retail.”

46. Mr X sent the Council further photos of the shop front and entrance. He explained they used the yard to show/display products and that customers could walk into the showroom if required. He also provided invoices and a retail public liability insurance certificate.
47. In May 2021 the Council told Mr X that following an inspection visit it decided his property did not qualify for the ERD.
48. On 24 May 2021 Mr X complained:
• If the Council had said earlier they would not qualify for SBRR given the number of units, they would have leased fewer units.
• He missed out on business grants due to the Council’s delay.
• It was a retail business, open to the public. They had stock on display and the public could walk in. The Council’s inspector had visited, walked in and seen the items on display. He had also provided photos, invoices and retail business insurance.
• He could provide retail accounts, cash register receipts and sales and purchase invoices to prove they served the general public if needed.
49. In June the Council said:
• The business was not eligible for SBRR for reasons already given and so not eligible for the SB grant.
• Grants were payable to the ratepayer as at 11 March 2020 unless it knew its record was incorrect. However, it did not record him as ratepayer until November 2020. Its grant scheme had closed by then and at that time business X was not eligible for SBRR or the ERD.
• Regarding the LRSG and Restart grant, Companies House showed business X was a wholesaler. Following further investigations, it concluded the business mainly operated as an online retailer. Therefore it rejected these grants.
• Following a review of the matter, its enquiries did indicate that one of the business units was used as a showroom and there was evidence this was open to the public. Therefore on this basis, it had used its discretion and classed this unit as a retail premises.
• It would make further payments to cover all LRSGs due to this unit to 31 March 2021. It would also pay the Restart grant.
• It did not consider the remaining four units qualified as non-essential retail premises ordered to close by regulations, as they supported the online business. Therefore, it would not award any grants or retail relief to those units.
50. Mr X argued 90% of customers visited the shop to view items before purchase and to collect items. All units supported the main retail premises. And, if the Council had not delayed naming the business as ratepayer it would have received the business grants.
51. The Council said it could not amend the account into the name of business X until 10 November 2020, well after the grant schemes closed. Even if it updated the account earlier it would not have paid a grant as business X was not entitled to SBRR or the ERD. Following its inspection visit it found the business was only online and only one unit could be classed as a showroom and open to the public.
52. Mr X then complained to the Ombudsman.
53. In response to enquiries the Council explained it reviewed Mr X’s LRSG application following his complaint in May 2021. At that stage, it decided the inspection report did indicate one of the units was used as a showroom, there was evidence this was open to the public and there was not sufficient evidence that the company was an online-only business. On this basis, it used its discretion and classed this unit as a retail premises. This was a discretionary decision based upon the inspection visit and ultimately, additional funding was the overall outcome. Therefore, it did not propose to offer a maladministration-related remedy.
54. The Council also confirmed it had applied the ERD to this same unit and confirmed this to business X via a bill sent in September 2021.

Findings

55. The Council recorded third parties as ratepayers for five units at the Address on 11 March 2020. It had no reason to believe its records were inaccurate until April 2020.
56. Upon information that its records may be inaccurate, the Council took steps to identify the correct ratepayer at each unit. I have seen no evidence of undue delay by the Council from April to September 2020. I therefore find no fault up to this point. I am lacking information on the Council’s actions between September and November 2020. However, I will not investigate this further as any delay at this stage did not cause Mr X injustice. This is because the grant scheme had closed by September. And, because Mr X did not have to await the Council’s decision before making changes to his business. Mr X could have sought independent advice on business rates liabilty at any time and reduced the number of units occupied if he wished.
57. The Council did not give clear reasons for refusing Mr X’s grant application in its correspondence of 30 September. This is fault. However, I am satisfied that business X was not in receipt of SBRR or the ERD at that time, which meant it did not qualify for a grant in any event. The Council’s fault caused Mr X uncertainty but did not affect its decision outcome.
58. Upon Mr X’s complaint, the Council considered grant eligibility again. This time it gave reasons for its refusal, namely that the business did not qualify for SBRR to get the SB Grant and it was not a retail business to get the RHLG. Although the decision lacked detail, with no reference to the ERD, I find this does not amount to fault. The Council gave a reasoned decision in line with the law. I find no fault in its decision making.
59. The Council refused SBRR because Mr X was the ratepayer on more than one unit and the rateable value of two units exceeded the threshold. The Council decided in line with the law. I find no fault.
60. The Council initially refused the ERD as it considered business X was online only and used the property for storage. The Council reached this decision based on the information available at the time and in line with the Government guidance. I find no fault in its decision making.
61. The Council refused the ERD again following an inspection. There is a lack of evidence it considered the further information provided by Mr X before doing so. However, upon a further review of all the information in June, the Council did accept one unit was a retail business open to the public. It also explained its reasons for refusing to accept the other units were retail and open to the public. The Council paid the LRSG, Restart and applied ERD to the retail unit and refused these reliefs and grants for the other units. The Council followed a proper decision making process and so I do not find fault.

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Agreed action

62. To remedy the injustice set out above I recommend the Council carry out the following actions:
• Provide Mr X with an apology for the lack of clear reasons for refusing a grant in its decision letter of 30 September 2020.
• Remind staff to provide clear, evidence based decisions, explained in the particular context and circumstances of the case.
63. The Council has accepted my recommendations.

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Final decision

64. I find fault by the Council causing uncertainty to Mr X. The Council has accepted my recommendations and I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman