The Ombudsman's final decision
Summary: Mr X complained the Council was wrong to refuse Mrs Y a business grant, causing her financial difficulties and distress. We found the Council at fault in its communications with Mrs Y.
We recommended the Council provide an apology to Mrs Y, make payments for distress, time and trouble, and revisit its decision on her grant application.
The complaint
Mr X complains on behalf of Mrs Y about the Council’s decision to refuse her a Local Restrictions Support Grant, causing financial difficulties and distress.
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) 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) 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) 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”.
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)
How I considered this complaint
I spoke to Mr X and I reviewed documents provided by Mr X, Mrs Y and the Council.
I gave Mr X and the Council an opportunity to comment on my draft decision. I considered their comments before making a final decision.
What I found
Local Restrictions Support Grant (“LRSG”) The Government introduced various grants to support businesses affected by lockdowns and restrictions it imposed during the COVID-19 pandemic.
The LRSGs were payable to the recorded ratepayer of a business, provided other eligibility criteria were met.
Where a council had reason to believe the information they held about the ratepayer on the first full day of the local restrictions was inaccurate they could withhold or recover the grant and take reasonable steps to identify the correct ratepayer. Councils were to make clear to recipients that the grant was for the ratepayer and may be liable for recovery if the recipient was not the ratepayer on the eligible day.
Liability for business rates The Local Government Finance Act 1988 (LGFA 1988) identifies three categories of ratepayer: occupiers owners, and persons named in central rating lists.
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.
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.
Principles of good administrative practice 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. The following points are relevant in this case.
The basis on which decisions are made and resources allocated, even under emergency conditions, should be open and transparent.
Decision reasons should be clear, evidence based and where necessary explained in the particular context and circumstances of that decision.
Councils should have clear and accessible appeal routes.
What happened Mrs Y says she has run a business at Address A since July 2020. She sub-lets the property from the main leaseholder.
The Council recorded a third party as ratepayer at Address A.
On 26 November 2020 Mrs Y sent the Council an occupation form notifying it she occupied Address A. She also applied for the LRSG.
The Council asked Mrs Y for copy of her lease and evidence of trading since July 2020 for example utility bills, bank statements, or invoices referring to the business address.
Mrs Y sent the Council a copy of her lease for Address A.
The Council said the lease referred to a different address so it could not accept this as a valid agreement. It also asked for proof of trading.
Mrs Y sent another lease document and said she had no utility bills because her rent included these.
The Council asked for other documents to evidence trading; for example, bank statements, invoices or receipts.
In January 2021 Mrs Y sent two invoices addressed to her at the business dated September and October 2020.
The Council acknowledged these and asked for a copy of Mrs Y’s public liability insurance.
Mrs Y explained she did not have this as she did not think she needed it, but she would get this once the business reopened.
In February 2021 the Council told Mrs Y the evidence she had provided to date was not sufficient to prove occupation. Therefore, it had not made her liable for rates and did not process her grant application. It had confirmed the leaseholder and would make them liable for rates. However, if she could provide further evidence of trading from the property since July 2020 it would reconsider its decision. For example bank statements, invoices, receipts, business accounts.
Mrs Y resent the lease and invoices already provided. The Council confirmed it had already seen these and it needed additional evidence.
In March Mrs Y then sent a letter from her accountant confirming she was a sole trader and self employed since July 2020. Mrs Y also said she had told the Council in July 2020 that she had taken over the business. Her rent included utilities but she enclosed a utility bill addressed to the main leaseholder with reference to the business, as proof that the business paid for utilities.
The Council told Mrs Y her evidence was not sufficient to prove trading from the address. If she could provide evidence of trading from July 2020, for example bank statements or business accounts it would reconsider.
Mrs Y said she did not have a business account and rent included all utilities. She had run the business from 15 July 2020 but due to the COVID-19 pandemic had to go into lockdown. It was very hard to open a business account but she had receipts for monthly rent payments. She had previously provided invoices from suppliers, a letter from her accountant and a lease agreement.
The Council said it would consider further evidence of trading. It asked for business accounts, the receipts for rent and, bank statements showing the rent leaving her account.
Mrs Y said no bank was accepting applications for business accounts when she opened in July 2020. She enclosed receipts for rent paid in cash monthly from July 2020 to April 2021.
On 27 April the Council asked for a copy of Mrs Y’s public liability insurance given the business was now open and trading.
Mrs Y sent the Council a copy of an insurance policy document dated 27 April 2021 in the name of the business.
An internal Council report dated 29 April outlined conflicts in the information available to the Council and suggested Mrs Y would need to provide further evidence to support a grant request. I cannot provide further details for data protection reasons.
On 4 June the Council told Mrs Y it had been provided with conflicting information regarding the people and businesses connected to the property. Therefore, it was unable to determine eligibility to award the grant. And it could not provide any further information regarding this matter. However, it said if she had any further evidence which she believed the Council had not considered she could supply this and it would review it accordingly.
On 24 June Mr X contacted the Council on Mrs Y’s behalf. He asked it to update her as ratepayer. He believed she was eligible for the grant and wanted detailed reasons why it was not paid. He noted English was not Mrs Y’s first language and apologised if she inadvertently completed any forms incorrectly.
The Council replied that it could not give any further details. It had conflicting information regarding the people and businesses connected to the property and so could not determine eligibility for the grant.
Mrs Y formally complained in September 2021 and sought a final response to contact the Ombudsman.
The Council provided its stage 1 response on 21 September.
It said the grant schemes were now closed and there were no rights of appeal. It had to apply the strict criteria provided by the Government. In this instance it was considered that the criteria were not met, so it did not pay a grant. It could not provide any further details.
Mrs Y said the Council had not explained why she did not meet the criteria for a grant.
In its stage 2 response the Council said it had other information which conflicted with the information she provided. It did not pay her the grant because it could not establish who occupied the property and who was the liable ratepayer.
Mrs Y again said this was not proper explanation.
In its stage 3 response the Council said information she provided and information it gathered led it to find she was not the ratepayer. She could contact the Ombudsman if she remained unhappy.
Mrs Y then complained to the Ombudsman. She said she did not understand the Council’s reasons for grant refusal or why it had not removed the leaseholder from the business rates bill.
In response to enquiries the Council outlined discrepancies and/or conflicts in the information it held regarding Mrs Y and the business, which it said led it to believe Mrs Y was not the liable party for business rates. It said that despite multiple requests Mrs Y did not provide the type of evidence it would normally accept as proof that a person was trading from a premises. Usually it would see utility bills, bank statements with business transactions, accounts etc.
The Council shared some of the concerns it had with Mrs Y’s evidence as follows: Two versions of a sub-lease, one with the incorrect address, both with discrepancies on the rent due.
Documentation and emails with various spellings of Mrs Y’s name.
Various email addresses and contact telephone numbers referred as belonging to Mrs Y.
No evidence on the bank statements provided that linked Mrs Y to the business.
Electricity bill in name of the leaseholder.
Public Liability insurance in name of the business with no link to Mrs Y.
Receipts for cash payments for rent, all identically written. No trace of where these cash payments are then paid into, or who is receiving them.
Third party invoice for various items addressed to Mrs Y at the business.
The Council said another reason that it did not process the grant application or amend the liable ratepayer was due to advice from another Council team. It has provided a copy of their report, referred at paragraph 36 above. However, I note the report suggested the Council seek further evidence from Mrs Y to establish liabilty.
I sent a draft decision to both parties for comments. I then held a case discussion with the Council to discuss its comments. The Council said in brief: It needed to make concurrent enquiries following information received on 29 April and it could not progress Mrs Y’s application until it completed these.
It did not provide more detailed responses to Mrs Y, explaining its views on her evidence, because ultimately it could not progress her application.
I issued an amended draft decision taking account of the Council’s position; namely that it was limited in the actions it could take at this stage.
In comments on my amended draft the Council said it could in fact meet the original recommendations.
Findings
Mrs Y’s complaint to the Ombudsman is slightly out of time. However, she has spent the past 12 months actively seeking to resolve the issue with the Council and then awaited its final response. In the circumstances I do not consider it reasonable to expect her to have brought her complaint to us sooner. I will therefore exercise discretion to investigate.
I cannot question whether the Council’s decision to refuse a grant was right or wrong simply because Mrs Y disagrees with it. I must consider whether there was fault in the way it reached its decision.
We expect councils to consider relevant information, disregard irrelevant information and to reach evidence based decisions in line with law and policy. We also expect councils to give clear reasons for their decisions and to offer a review or appeal. This remains the case even if there is no right of appeal.
Upon Mrs Y’s contact the Council sought to establish who the correct ratepayer was.
I consider this was in line with Government guidance.
The Council was entitled to ask Mrs Y for evidence to prove occupation. However, upon her providing such evidence, it did not clearly explain why it would not accept this. This is fault. For clarity the Council: Did not comment upon invoices provided but asked for more evidence (January 2021).
Did not explain why the utility bill was inadequate but asked for more evidence (March 2021).
Did not explain why it would not accept the rent receipts as evidence of trading (April 2021).
Did not explain why it did not accept the public liabilty insurance document as evidence of trading (April 2021).
Because of the Council’s fault, Mrs Y suffered frustration and uncertainty. She was also put to avoidable time and trouble seeking to discover the Council’s reasoning. And due to the lack of clear reasons, she lost the opportunity to challenge or appeal the Council’s conclusions. This is injustice. I will recommend the Council remedies this personal injustice. However, taking into account this case has very specific circumstances, I do not consider a service improvement to prevent recurrence is necessary.
Agreed action
To remedy the injustice set out above the Council should carry out the following actions:
Within one month
Provide Mrs Y with an apology for the identified fault; Write to Mrs Y with a decision on whether it finds her in rateable occupation, with reference to the evidence she provided and reasons why this is/is not adequate proof. If the Council maintains Mrs Y is not in rateable occupation it should offer her the chance to request a review of its decision. Should the Council find Mrs Y is in rateable occupation, it should pay her an amount equivalent to the grant requested; Pay Mrs Y £300 for time and trouble and; Pay Mrs Y £150 for distress and uncertainty.
The Council has accepted my recommendations.
Final decision
I find fault in the Council’s communications with Mrs Y. The Council has accepted my recommendations and I have completed my investigation.
Investigator's decision on behalf of the Ombudsman