This item was published during the term of a previous administration that ended in April 2007
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Moves to close tax loophole
17/07/2006
The Executive has moved to ensure certain vulnerable people do not pay council tax because of a change in the law.
An unintended consequence of new care legislation meant certain people who are in receipt of a housing support service and residing in certain defined shared dwellings were asked to pay council tax, when previously they had no local tax liability.
Legislation has now been laid in the Parliament which will close the loophole and exempt relevant properties from local taxation altogether. It is planned to come into force on October 1, 2006.
Ministers have also asked all local authorities to write off any council tax debt to people affected - and to grant refunds to those who have already paid.
The Minister for Finance and Public Service Reform Tom McCabe said:
"I am pleased we have been able to address this unfortunate anomaly. We fully appreciate this situation will have been upsetting for those affected and that is exactly why we have taken this action to sort it out.
"We will ensure the loophole is closed - and that no-one is one penny out of pocket as a result of it.
"I hope this reassures those people we are doing all we can to help them to live a secure and independent life. It has taken longer than we would have liked to resolve this as it is so complex, but I am satisfied we are announcing a solution which will be welcomed by all concerned."
Ministers have now asked all Scottish local authorities to write-off any council tax debt due from residents with a tenancy agreement or license to only occupy part of a dwelling, and in receipt of a housing support service, and where the kitchen toilet or bathroom is shared. For those who have already paid their council tax bills a refund will be granted. All Housing Support providers have been informed of this decision and anyone who thinks they meet the definition should discuss this with their provider.
Following the write-off/refund, the Executive will provide a specific grant to each local authority to cover the full costs, including water and sewerage charges.
Due to the Regulation of Care (Scotland) Act 2001, a care provider is required to register with the Care Commission as a particular category of service. One of these categories is a "care home service". Any subject classed as providing a "care home service" will be entered onto the valuation roll and charged non-domestic rates, as has always been the case. The other category is a "housing support service". A "housing support service" is a service provided to individuals who require some form of support in order for them to continue to live independently. Individuals in receipt of a housing support service occupy a dwelling with a formal tenancy agreement and are placed in the council tax system.
There are certain homes, previously classed as care homes, which are now registered as providing a housing support service to individuals with separate tenancy agreements. These homes are akin to standard sheltered homes, although providing a higher level of support. The result of this change in registration means that each dwelling with a tenancy agreement must be entered onto the valuation list and become liable for council tax. There appears to be general consensus that the type of dwellings affected are those where certain parts are shared by the residents (such as the kitchen), and where a housing support service is provided.
The definition of affected dwellings is: "Any lands and heritages, containing two or more dwellings, occupied by persons, or which could be occupied by persons, who do not constitute a single household and each of whom has a tenancy agreement or license to occupy part only of the lands and heritages, but is not liable to pay rent for the lands and heritages as a whole, and where a housing support service (as defined in Section 91(2) of the 2001 Housing (Scotland) Act) is provided which is registered with the Care Commission, and where either the kitchen, toilet or bathroom is shared."