The Ombudsman's final decision
Summary: Mrs X complained that the Council wants her to repay a business grant it awarded her. She said the Council did not properly consider her evidence, and will not let her repay it in instalments. Mrs X said the situation made her ill, caused her to lose sleep, and caused a financial strain on her and her family. We find the Council at fault, and the fault caused Mrs X injustice. The Council has agreed to apologise to Mrs X and make a fresh decision considering all of the relevant evidence.
The complaint
The complainant, who I refer to as Mrs X, complains that the Council wants her to repay a business grant it awarded her. She says the Council did not properly consider her evidence, and communicated poorly with her. She complains that the Council will not let her repay it in instalments.
Mrs X says the situation made her ill, caused her to lose sleep, and caused a financial strain on her and her family. She says the Council had no compassion and threatened her with bailiffs.
The Ombudsman’s role and powers
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) 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) 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”.
How I considered this complaint
I considered the information and documents provided by Mrs X and the Council. I spoke to Mrs X about her complaint. Mrs X and the Council had an opportunity to comment on an earlier draft of this statement. I considered all comments and further information received before I reached a final decision.
I considered the relevant legislation and statutory guidance, set out below. I also considered the Ombudsman’s published guidance on remedies.
What I found
What should have happened 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.
A business’s 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 are backdated to 11 March 2020, do not entitle a business to a grant. A council can 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.
Only one grant could be awarded per hereditament (meaning a property such as land or a building that can be inherited).
What happened Mrs X ran a retail business from a shop which she rented. This shop had a ground floor retail space and an upstairs space on the first floor. In the summer of 2019, Mrs X sub-let the ground floor retail space to another business who I will refer to as Business A.
In April 2020, Mrs X applied to the Council for a grant under the Small Business Grant scheme. The Council asked Mrs X to prove she was in business on 11 March 2020 to qualify for the grant. Mrs X provided evidence to support her application. She told the Council she had sub-let the ground floor to Business A but that she still traded from the first floor of the shop, also working partly from home.
In May, the Council awarded Mrs X the grant of £10,000.
In August, Business A applied to the Council for the same grant. Business A told the Council Mrs X vacated the property in September 2019. The Council accepted this. It backdated its business rates records to say that Business A was in rateable occupation from September 2019. It awarded Business A the grant of £10,000.
In September, the Council told Mrs X that due to a dispute over who occupied the shop, she was liable to repay the grant in full.
Mrs X provided more information to the Council to prove that she had been occupying and trading from the first floor of the property. She said the property had not been split by the Valuation Office Agency, so she remained liable for the business rates. The Council maintained its position.
Mrs X complained to the Council. The Council said its decision was correct.
Mrs X then complained to the Ombudsman.
Analysis Occupancy dispute In deciding that Mrs X was not in rateable occupation of the shop (the hereditament) and therefore did not qualify for the grant, the Council considered the following information: Business A’s grant application form; further information from Business A; the fact that the shopfront signage changed in 2019 showing Business A’s occupation; estate agent adverts showing the shop to let; and, Mrs X’s Facebook posts saying her shop was closing down/moving online.
The Council says it did not ask Mrs X to respond to the evidence provided by Business A. It also did not discuss with Mrs X the evidence at bullet points c to e, above. The Council says it made a decision that on the balance of probabilities, taking into account points a to e above, Mrs X was not in rateable occupation and was therefore not eligible for the grant.
Regarding point c, Mrs X says the sign changed because Business A was operating out of the ground floor of the shop. She says this does not prove she was not operating her business out of the first floor.
Regarding point d, Mrs X says she advertised the property to let in 2019 through more than one estate agent because the landlord would not let her out of her lease. She says she wanted another business to take over the lease from her. She says Business A found the shop through the estate agent adverts. She says the estate agent adverts do not prove she was not trading from the first floor of the shop.
Regarding point e, Mrs X says she does not recall posting about her shop moving online. However, I have seen the posts which say this. Mrs X says the Council did not ask her about this.
The Council made a balance of probabilities decision without gaining all the information possible to make its decision. It did not allow Mrs X a right to respond to the above evidence or to allow her to accurately explain her position. I therefore find that the Council did not have all of the relevant information to make its decision that Mrs X was not in rateable occupation of the shop. For this reason, I cannot say that the Council did a thorough and balanced investigation. This is fault.
This fault caused Mrs X injustice because she lost an opportunity to explain her position to the Council and for the Council to consider both sides of the occupancy dispute.
Mrs X says she told the Council in summer 2019 that she had sub-let the ground floor of the shop to Business A. However, neither the Council nor Mrs X have any evidence to support this. In the absence of this evidence, I cannot say that the Council knew Mrs X had sub-let the shop in 2019.
The Council says if it knew Mrs X had sub-let the shop, it would have either advised Mrs X to contact the Valuation Office Agency (VOA) or applied to the VOA directly to split the shop. If the VOA had split the shop (meaning there were two rateable occupancies: Business A on the ground floor, and Mrs X on the first floor), the Council says it would have awarded both Mrs X and Business A the grant.
Unfortunately, as Mrs X did not apply to the VOA to split the property, the shop remains as one hereditament. This means the Council can only award one grant to one business operating out of the shop. Because Mrs X moved out of the property at the end of her lease in May 2020, she no longer has an interest in the property. For this reason, Mrs X cannot now apply to the VOA to split the property retrospectively.
Communication Mrs X complains that the Council communicated poorly with her. She says the Council initially told her it wanted the grant back because her business was not a limited business at the time. She says the Council then said she was not eligible for the grant because of the occupation dispute.
The Council accepts that it gave Mrs X two reasons for wanting to take back the grant. It says this was an error due to an assumption made by an officer.
I can see no evidence to show the Council explained to Mrs X that it made a mistake, or the reason for its mistake. While the mistake itself is not necessarily significant enough to constitute fault, the Council should have told Mrs X that it made a mistake. This is fault.
Mrs X also complains that when she asked the Council how she could appeal against the occupation dispute, it replied saying she could not appeal the grant decision. She says this is not what she asked.
I agree that the Council did not answer Mrs X’s question. The Council’s response could have been clearer and could have answered her question. While I do not find that this is significant enough to constitute fault on its own, when taken together with the other instance above, I find it is evidence of poor communication. This is fault.
This fault caused Mrs X injustice because it contributed to her uncertainty and unnecessary distress.
Repayment by instalments Mrs X complains the Council would not agree to a repayment plan, and that she must repay in full or the Council will send bailiffs.
The Council says it asked Mrs X in November 2020 for details of her income and expenditure so it could consider a repayment plan. It says Mrs X sent bank statements but no information about her income or expenditure. The Council says once it has received this information, it will consider whether it can offer Mrs X a repayment plan.
I do not find the Council at fault. The Council is entitled to ask for information about income and expenditure before it agrees to a repayment plan. However, I would strongly urge the Council to consider a repayment plan for Mrs X in future, if necessary and if Mrs X provides the required information.
Agreed action
Within four weeks of this decision, the Council has agreed to apologise to Mrs X in writing for its poor communication.
Within three months of this decision, the Council has agreed to take a fresh look at its decision regarding whether Mrs X was in rateable occupation of any part of the shop. In making a fresh decision, the Council should give Mrs X an opportunity to explain the evidence.
If, after fresh consideration of its decision, the Council is satisfied that Mrs X was not in rateable occupation of any part of the property, it can seek to recover the grant from Mrs X. If this is the case, I would strongly urge the Council to consider a repayment plan with Mrs X.
However, if the Council decides that Mrs X was in rateable occupation of part of the premises, it may wish to consider if there are grounds to exercise its discretion and award her some of the grant or another applicable grant. This will be a matter for the Council.
The Ombudsman will need to see evidence that these actions have been completed.
Final decision
I have completed my investigation. I find the Council at fault and the fault caused Mrs X injustice. The Council has agreed to take action to remedy the injustice.
Investigator's decision on behalf of the Ombudsman