COUNCIL TAX

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Thousands of people, possibly millions, could be entitled to refunds on their council tax because they have been in the wrong band for more than ten years. New research suggests that as many as 14% of properties could have been placed in the wrong council tax band in the early 1990s. This is because the valuation of the properties was left to a haphazard and error-ridden system based on guesses by estate agents.

If a home was placed in the wrong band the owners will have over-paid thousands of pounds since the system came into force in 1993. A survey by consumer website, moneysavingexpert.com, found one house out of seven, which were selected at random, was placed in the wrong band. The owner is now applying for a refund that is likely to run into several thousand pounds. Founder of the website, Martin Lewis, said that if this pattern is repeated nationally, hundreds of thousands, possibly millions, could be entitled to money back.

The website has set up a property price and council tax calculator that will allow the public to check whether they are in the correct band. The average Band D council tax bill has risen by some 121% since it was introduced in 1993 and is now £1,268 a year. Band D, which is considered the benchmark for the entire system, relates to properties that were valued at £68,001-£88,000 on April 1,1999. Band E relates to homes that were valued at £88,001-£120,000; Band F covers £120,001-£160,000; Band G is £160,001-£320,000; while Band H is any higher figure.

Someone whose property is placed in Band E will pay 22.2% more than Band D, while those in Band F pay 44.4% more. A person in Band G pays 66.7% more, while those in Band H pay double. In reality, someone whose home was incorrectly placed in Band E rather than D has been paying 22.2% too much every year since 1993, that's 13 years. Based on average figures, the amount of over-payment would add up to £281.50 for last year alone and over 13 years, the refund would probably be more than £2,500.

HOW TO MAKE A CLAIM ON COUNCIL TAX

* Visit voa.gov.uk to see if you pay more than your neighbour. Enter the postcode and house number. (If you pay less you don't have to tell your council).

* If you think you are paying more, write to your local listing officer through the voa.gov.uk website and explain why you think your banding is incorrect.

* The Listings Office has a duty to ensure all bands are correct, so it should alter the valuation if it believes it is required. This has been successful in many cases, however, it can go up as well as down, although you will not have to backdate payments.

* If the application is rejected, or you do not receive a response, send a written appeal to the Independent Valuation Tribunals Service.

(Source: Mail on Sunday, Jan/07)

Deputy Prime Minister John Prescott apologised after admitting council tax bills for one of his official homes were paid with taxpayers' money. A total of £3,830.52 in public money was used from 1997 to pay tax for the flat at Admiralty House, London. Mr Prescott, who is in charge of council tax, said it was a mistake and he was reimbursing the government. He said the mistake was an "inadvertent error" and that he had thought he was paying council tax on all of his three homes.

Mr Prescott's officials stress he paid council tax on his constituency home in Hull and the Clapham flat which he gave up in 2003 and he had believed council tax on Admiralty House, near Trafalgar Square, was being paid from the money deducted from his salary as tax on other benefits for his job. In fact, the government was paying the council tax bills at discounted rates, in line with previous practice, he said.

He explained the mistake in a Commons written answer to Conservative shadow local government secretary Caroline Spelman. "In 1997, the government carried on paying council tax as before on the flat and claimed a discount (on a second home/company basis)," he said. "This was not confirmed with me and nor was any advice given to me at the time. On reviewing the situation, I am now aware that an inadvertent error has occurred, based on a genuine misunderstanding."

Mr Prescott said he was now insisting all future council tax bills were sent to him personally and telling Westminster City Council Admiralty House should be regarded as his primary home for council tax purposes. Mr Prescott's spokesman said he did not have to reimburse the public purse for the tax costs but believed it was right to do so as the minister responsible for council tax. The deputy prime minister was defended by Tony Blair's official spokesman, who said, "It is a classic case of left hand-right hand. The matter was drawn to his attention in a public way and he discovered the misunderstanding." (Source: BBC News, Jan/06)

John Prescott should be paying more than a third of his ministerial salary in tax for the benefit-in-kind that he receives from living in his Government-owned flat in Whitehall. The three flats in Admiralty House, all occupied by Labour Cabinet ministers, are together worth about £7 million. Under current rules the tax liability on such a benefit is calculated by finding five per cent of the property's value and taxing it at 40%.

The annual bill for the £2.3 million grace-and-favour residence is thus £46,000, a hefty slice of Mr Prescott's income. Added to that are expenses of running the property, such as heating and council tax if paid by the landlord. The same tax liability should apply to the other ministerial tenants, Geoff Hoon, the Leader of the House of Commons, and Margaret Beckett, the Environment Secretary. The three escape full income tax liability on the grounds that they inhabit "official residences", but why exactly that should be so is a mystery.

According to an answer given by the Prime Minister in February 2002, the three flats in Admiralty House are by tradition assigned to senior ministers, but on what grounds is unclear. The Defence Secretary was usually one of the residents, but Mr Hoon stayed in his flat despite losing his job. Michael Warburton, the senior tax partner at Grant Thornton, explained, "Unlike the Prime Minister, who is obliged to live in Downing Street, and the Foreign Secretary, who should do the same at 1 Carlton Gardens, there is no particular reason why those three ministers should inhabit Admiralty House. You only escape liability if you must live in a residence on security grounds."

He added, "Why do these three ministers require more security than, say, the current Defence Secretary? Rules on benefits in kind are clear and there is really no reason why Mr Prescott should get away with enjoying such a huge benefit-in-kind for £13,400 in income tax when he should be paying more than £46,000." Mr Prescott said he had "no legal obligation" to pay council tax on the flat, but Mr Warburton said that was "nonsense". He said, "Why doesn't he? Someone, either himself or his department, have to pay. And if the department does, then he should register that on his tax form as a benefit-in-kind". (Source: Daily Telegraph, Jan/06)

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