TAC0010

Written evidence submitted by Sid Wheeler

 

Area for Reform/Reform to consider in response to pressure on system.

 

 

Council Tax – is banding based on historic price of dwellings an effective way to generate local revenue?

 

Dwellings are currently assessed by the Valuations Agency (VOA) based on their 1991 market value.

 

However, the current regressive system of taxation based on banding (capped at Band H) means the greatest burden falls on those households with low financial resources.

 

During the Corona Virus crisis, news reports have covered stories of families in receipt of food aid – yet still having to find to resources to pay Council Tax bills. Those on benefits can receive reductions to the tax, but the tax still applies.

 

Those who care for relatives at home cannot be disregarded for Council Tax – an individual in their 80’s caring for a partner may receive a reduction (if they’ve found the time to apply, or even have been made aware of the option), but they cannot be disregarded, despite Carers UK estimating a saving of £132 billion to the UK economy.

 

I raised this issue with my local MP – and the rationale given by The Treasury was that ‘they [spouse/partner carers] have to live somewhere’. This is technically true, of course – yet in my experience of providing care, if my mother had gone to stay at my sisters and I had lived with my father alone, their property would have become exempt. (Another resident being able to provide 35hours of care and be exempt while a spouse/partner cannot).

 

Meanwhile the local authority would have received no additional income due to my mother living at my sister’s residence. Some might conclude that this is absurd (if not cruel). Yes, ‘they’ do have to live somewhere, but residence does not necessarily equal revenue.

 

Because local taxation is not levied per capita, but upon dwellings – local revenue generation also does not respond accurately or rapidly to fluctuations in population change.

 

Local taxation levied on a % of earnings, distributed to local authorities based on postcode at tax year end would be a proportional way to safeguard local authority revenue. It would respond much more accurately to the reality of local population change and service demand.

 

Consider also that, as it stands, taxpayers who rent properties are taxed based on the value of an asset they don’t own. The system does not work effectively, or fairly, at an individual or local authority level.

 

 

 

The Cost of Defending Ineffectual Process

 

After pursuing a banding challenge with the VOA, I submitted FOIA requests to try to discover what level of public funds are given to defending banding decisions at a national level. Somewhat ironically, these requests have been rejected on the basis that it would incur too much of a financial burden for the department to investigate.

 

The VOA uses HMRC governance – the CRC Act – to deny complainants access to house price data from 1991. Such data is only available once the challenge progresses to tribunal. The VOA use the CRC Act to claim that it would be unlawful for an agent of HMRC to divulge matters relating to an individual’s tax affairs.

 

This appears to be misappropriation of the law given that house price data post 1995 and council tax banding is openly available via the Land Registry and local council portals. Why is 1991 data sensitive and how would an individual be put at a disadvantage by having such data in the public domain when it is has been common practice since 1995?

 

This demonstrates that the current system of taxation based on a banding model ranging from A-H not only taxes low to average income households disproportionately, but substantial effort is used to divert and dissuade taxpayers from a simple process of challenging bands based on 1991 property valuations. This may strike the Committee as a misuse of public funds; it should certainly raise questions around the advertised Civil Service values of transparency and accountability.

 

Where the Tax works

 

Council Tax does, however, work very well for the wealthiest. Consider the map below – the upper area shows the area of land occupied by the home and grounds of a substantial UK landowner. It is representative of many such large estates. The lower area shows nearby residential land with many thousands of dwellings.

 

 

When the VOA assess new buildings they use a variety of criteria to establish what 1991 value might have been. Along with assessment of building size, materials etc they also measure the area of the land the dwelling’s plot occupies.

 

Even at rough estimates and reducing areas to accommodate other buildings and dwellings that form part of the estate bordering the home, the fact is – at Band H – the greatest levy that can be applied at current LA rates is a fraction over £3000. While the household will not constitute anything like the numbers of people that reside locally – such a vast property pays only one third more than many local dwellings that are valued at tiny fractions of a Grade 2 listed mansion set in acres of grounds.

 

Council Tax does nothing to reflect the UK Government’s claims to be ‘in it together’. The current system compares average people, with disputes arising because two very similar properties are banded differently – placing demands on public funds to defend these decisions – while vastly more valuable properties receive no scrutiny at all.

 

In addition to the demand on public funds through both the assessment and banding of properties by the VOA – and defending those decisions – the Committee might also consider whether the system causes HMRC to indulge in further misuse of public funds. Up until recently, the Adjudicator’s Office was described as ‘An Impartial Service For All’. The Adjudicator apparently being an independent body tasked with judging disputes between taxpayers and HMRC and the VOA.

 

Yet staff described as ‘Adjudication Officers’ appear to be officers employed by HMRC. I gathered evidence of this when pursuing a complaint. The AO’s office runs its digital correspondence via HMRC servers, from which emails addressed to associates of Helen Megarry, using the same AO format, are bounced. Meanwhile emails addressed to the same individuals using the HMRC format are not. (Until recently it was not possible to email the AO’s office – only a PO Box address was provided).

 

In Ms Megarry’s 2020 AO annual report she describes how the department have moved to ‘introduce new ways of working that ensure the independence of our investigations’. A department that described itself as ‘impartial’ two years earlier shouldn’t have to find ways of being independent. It should already be robustly independent from the body it is tasked to investigate or clearly state its associations.

 

I mention this because it is illustrative of how complex systems balloon into the need for ever greater numbers of staff to police and defend complexities.

 

Aside from which, for the Adjudicator and The Treasury to make misleading claims, whether using the word ‘impartial’ or ‘independent’ I believe misleads taxpayers (classed as ‘customers’ by HMRC) based on the stipulations of The Consumer Rights Act – which is applicable to government departments. Taken along with the unexplained need to keep 1991 house price data hidden from public scrutiny, one might consider many facets of the basis on which local taxation is substantiated to represent fraud.

 

I trust this information is constructive and of use to The Committee.

 

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AO website as at 2018

 

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Consumer Rights Act citation

 

August 2020