In this section
S.24(4) (a) of LGFA 92 provides that no increase shall be made to a Council Tax banding of a dwelling following structural alterations ("material increase") until the whole or part of that dwelling is sold ("relevant transaction") or there is a general revaluation of all dwellings for Council Tax purposes.
Practice Note 3 expands on the definition of ‘material increase’ and ‘relevant transaction’ and provides guidance to caseworkers to implement a band change where necessary.
Where structural alterations are notified to the VOA, the information is noted on the CDB via a CR10 logged report. Should a general revaluation of all dwellings for Council Tax purposes occur, property is valued as it exists as at the date the list comes into force. Therefore any structural alterations are automatically taken into account in the revaluation and there is no requirement to bring forward any CR10 logged reports into a new valuation list.
The logged CR10 report procedures below are mandatory and must be strictly followed in all instances. Where letters are sent to taxpayers, they must be individually prepared with the spaces completed in typescript. It is not an acceptable standard for the information to be inserted in manuscript.
LOs are targeted to clear all activated logged reports within the current elapsed time standards. This target includes notification to the taxpayer.
The Council Tax application has been designed to recognise reports which are for a "material increase". These will all show Reason for Report code CR10, whether received from BAs or raised by LOs.
When a report with code CR10 is input, the computer will automatically search the Property Transactions (PT) application for a "relevant transaction" (i.e. one completed after the given effective date of the "material increase").
If one is not found, the computer will log the report.
If a "relevant transaction" has been input to the PT Application and it has been linked to the same address, the logged report will be activated immediately as a Coincidence of Transaction (COT) case. This does not have to be an open market sale, but includes transactions which have a transaction type of NAL (Not at Arm's Length) or NMV (Not Market Value).
For statistical purposes, the case is outstanding from the date of its activation, not the date the working docket is output to hardcopy.
When inputting transaction details, care should always be exercised to ensure that the correct address is selected for the transaction.
This is especially important when considering the interface with Council Tax, where the input of a "relevant transaction" from Stamp Duty Land Tax (SDLT) data could be a trigger for a possible rebanding for CT purposes if there is a logged CT report within the CDB. A "relevant transaction" means a transfer on sale of the fee simple (freehold), a grant of a lease for a term of 7 years or more, or a transfer on sale of such a lease.
The "relevant transaction" can be for the whole of the dwelling or for part only. In the case of composites, the dwelling includes the whole of the non-domestic or exempt part of the composite as well as the domestic part. Stamp Duty Land Tax data for composite properties must always be linked to both the non-domestic and the domestic addresses.
The sale of a Freehold Ground Rent is a "relevant transaction" for CT purposes and a SDLT for such a sale is a trigger for possible rebanding.
The sale of garden land attached to a domestic property which may be for development, road widening, sub-station site, or to another domestic property as additional garden for that dwelling is a trigger for possible rebanding. A similar situation applies if part of a domestic property (e.g. a garage) is sold separately. In these cases, a SDLT must be linked to the appropriate domestic address.
The generation of working dockets following the trigger is carried out within the CT Application.
COT working dockets VO 7453 are output in hardcopy at the same time as those relating to Immediate Review cases for the BA (see Section 2 part 1).
Following output, COT working dockets must be scrutinised to ensure that a transaction has occurred, i.e. that details are shown under "Transaction History", before being passed to the Council Tax Referencing Manager. It is unlikely that a caseworker other than '999' will be shown on the working docket. Therefore, case details should be amended on the computer to show the nominated caseworker as soon as the case is allocated.
Occasionally, COT working dockets may be output even though a transaction has not been input to the PT Application. The reason for the generation should be investigated before the working docket is cleared as No Action. An example is that an Immediate Review working docket has been generated with an effective date equal to, or later than, the COT working docket effective date.
Such an action prompts the Council Tax application to query whether the report still needs to be logged, and the only way this can be achieved is by outputting a working docket.
On the rare occasion when it is established that the report should still be logged, a LO report must be registered with an effective date one day later than that shown on the COT working docket.
Cases should be made up in the way described in Section 2 part 3, including the addition of the domestic survey report (DSR) if one exists, and passed to the Referencing Manager or nominated caseworker.
Working dockets can be no actioned where alterations can be adequately identified from either the information supplied by the BA or an external inspection, made adjoining the site when in the vicinity, as being small and not band-critical. Survey particulars must be updated on ELDA and the CDB with the available information, including estimated dimensions.
It is essential that no increase in the current banding is made without contact with the taxpayer to verify the facts. This is to ensure that the taxpayer has been alerted to the situation and does not receive a LO Notification "out of the blue". The verification may indicate that the dwelling must be inspected internally before the banding can be revised, or that the report is wrong, e.g. a report with a reason of ‘extension’ is in fact the addition of a ‘granny annexe’.
Where no contact has been possible, or the facts have not been verified, and an internal inspection is deemed necessary to deal with a COT report, an appointment must be made. This prepares the way for the caseworker by alerting the taxpayer to the fact that the banding may need altering and explains the legislation. Standard appointment letters should NOT be used.
During the course of the inspection the caseworker should not get drawn into complicated discussions concerning the legislation, but should advise the taxpayer to put comments to the LO either by letter, email or telephone.
Subsequent action should be undertaken in accordance with Section 2 part 4.
Where a higher band is warranted, the CDB generated LO Notification must be issued without delay and accompanied by a letter which explains the matter further.
Whilst there is no legal requirement to notify the taxpayer that there will be no change to the banding, it is recommended a letter is sent following any contact with the taxpayer in the interest of good customer care.