Business rates revoked and council tax backdated. Can they do this?

CMB1980

Hi all,

Hope this is in the right place. 

We bought a holiday home late Oct 2018, the kind you can’t live in full time, just 11 months, it has private bin collection and was registered with business rates as a holiday rental. 

It needed gutting and we were doing it all by ourselves couldn’t afford to pay someone to do it. We had business rates with an exemption as it wasn’t rentable yet. Then covid hit, 2 years pass, business rates people say we are still ok on the exemption.  Then the celling collapses due to a leak, then the management company put in a subsidence claim the house has to be covered in scaffold, bricks removed nightmare… next thing it’s been 5 years! But it’s finally done. We kept in contact with business rates the whole time they kept us as exempt for that time. 

We thought it was a crazy amount of time to allow us to be exempt but we weren’t going to argue! 

3 weeks ago I had a letter saying they were switching us to council tax until we could prove it had been rented out for 70 days, ok no prob BUT they have back dated the council tax and say we owe £6,500 I am beside myself, I’m so stressed.

I asked if they were allowed to just change their mind and they say yes.

This is the Isle of Wight by the way. 

Any advice appreciated 

caroline 

lincroft1710

Can you give some dates please?

Date CT is backdated to. Date you completed the renovation. Date subsidence claim submitted. Also who were you in communication with, the council or the VOA?

martindow

And also were your contacts by phone or do you have letters or emails regarding the exemption?

CMB1980

Hi, Thanks for replying.  CT has been backdated to the day we purchased the property at the end of 2018. We have letters from the business rates dept with exemptions etc for all the years since purchase up to April 23. The renovation was completed late last year after the interior repairs following the subsidence work. I have photos showing the leak damage with the floors and joists removed from july 2021 and the scaffolding went up for the subsidence work in April 2022 with the interior finished at the end of august 2022 due to the contractors schedule. I can see how we could be liable for last year but we were unable to open as a business during covid and were given rates exemption because of that.
Thanks
Caroline

lincroft1710

This is a complicated issue.


I am presuming you have had a Notice Of Alteration Of The Valuation List from the VOA putting a CT band on the property with an effective date of  xx October 2018.  As the property had not been available to let from when you bought it up to 31 March 2023 (rules changed on 1 April 2023), then I believe the VOA were correct in removing the property from the Non Domestic Rating List and banding it for CT. They appear to be correct in backdating as it ceased being used for letting on the day you bought it.


However the unfortunate part is that it appears during part of 2021 and 2022 the property was incapable of beneficial occupation. If this were the case and it had been known at the time then the property would have been deleted from the CT VL and not re-entered until capable of reoccupation.


Although I am ex VOA (over 15 years now) and for 12 years was dealing with CT appeals, I have never dealt with such a case, so I can't offer much help. What I would suggest is that you contact the VOA and inform them (giving precise dates) of the incapability. My guess is that they will respond with "this happened in the past and nothing can be done" or similar. You should therefore appeal the VOA notice on the grounds of the period of incapable of occupation. There is absolutely no guarantee of your appeal being successful (if unagreed with the VOA, it will proceed to a Hearing by the independent Valuation Tribunal), but if you were it would mean a small reduction in your CT bill

CMB1980

Thank you for taking the time to think on this.  I’m just struggling with why they changed their mind and the previous br exemptions for the past years no longer stand? I was concerned at the time and asked many times when I spoke to them “oh really? are you sure?” This is exactly the scenario I was fearful of. I do understand the current recent change to council tax, although the council don’t empty our bins (we have to pay private) and we aren’t allowed to live in the house full time! So full rates seems a bit unfair.  

It’s awful that they can just go back on what they themselves determined without properly even explaining why. I feel tricked and stressed , they gave us 2 weeks to find £6;500 which of course we couldn’t and are now getting demands. 

lincroft1710

Although you may not have been aware, the onus was on you to ensure your usage of the property was commensurate with the rules relating to being assessed for business rates as opposed to CT and if it wasn't to notify either the council or the VOA . Again unfortunately, not being so aware is not a reason for the change to CT not to be backdated. As soon as the property ceased being let out (which at the latest was your date of purchase) then the property ceases to be assessed for BR and must be assessed for CT instantaneously.


Regarding lack of bin emptying and 11 month occupations, councils have to charge the full amount per band except in very few circumstances, none of which apply to you. The 11 month occupation would be reflected in the value of the property and thus be reflected in the CT band.


One thing you should scrutinise is how the bill has been compiled. As this is a "second home" and is also unoccupied it appears that the IOW Council (as do most others) charge double CT for properties that have been empty for between 2 and 5 years.

CMB1980

Thank you again for answering, it has been much more informative than our calls to the council! 

I see so ultimately, it falls to us. Is there no liability on the councils part as we kept them informed by email and phone of our situation and they never corrected it? Despite talking it all through with us. 

I understand the buck stops with us, but we were actively being told all was well and now it has accumulated to a huge amount of money. 

Do you think we can at least have some time to get the money together (I plan to sell my car).  Would we likely be able to get a payment plan? 

lincroft1710

Even if the council were at fault, I'm sorry but it won't help you because the property has now been correctly assessed. At best they might apologise, but I doubt if they would acknowledge they made an error.  You can ask the council if they will agree to a payment plan, however it is entirely up to them. But if they don't, I suggest getting in touch with your local councillor who may be able to persuade the council to agree. 

Although I have been rather matter-of-fact in my posts, this doesn't mean I am not sympathetic. Unfortunately you have found yourself in a situation where understanding and leeway are overruled by legislation.

tightauldgit

CMB1980 said:

Thank you again for answering, it has been much more informative than our calls to the council! 

I see so ultimately, it falls to us. Is there no liability on the councils part as we kept them informed by email and phone of our situation and they never corrected it? Despite talking it all through with us. 

I understand the buck stops with us, but we were actively being told all was well and now it has accumulated to a huge amount of money. 

Do you think we can at least have some time to get the money together (I plan to sell my car).  Would we likely be able to get a payment plan? 

I think you'd only really have any complaint/recourse to the council if it had cost you money that you wouldn't otherwise have had to pay. If all they've done is delay them charging you the correct amount you would have paid anyway then you haven't lost anything - in fact you've gained by having the money until now. If they've imposed any kind of late payment fees or penaties you might have an argument to have those waived and I would like to think they'd acknowledge their mistake and offer you something in terms of a payment plan/time to pay.