DOZENS of homeowners could be entitled to a cash windfall of thousands of pounds after East Lothian Council was ordered to refund council tax overpayments dating back over the last 30 years.

The council is facing a financial headache after valuers moved 79 houses in Haddington down from the band they originally assessed them in after a review.

And while the council initially believed that no back payments would be required, it is understood that Lothian Valuations Joint Board (LVJB), which ordered the review, has told it to repay the money.

Councillor Norman Hampshire, council leader, has insisted that the cost to the local authority is not considered to be “significant” when compared to the estimated £70 million income from council tax it will receive over this financial year.

However, council sources have said that the decision sent shockwaves through senior management, who could now face paying out hundreds of thousands of pounds, as well as devoting a team of workers to tracking down every council tax payer who lived in the houses involved over the last three decades.

The LVJB carried out an investigation into council tax bands in the town after a number of appeals raised concerns that there was an inconsistency among similar houses.

'Very complex'

The investigation saw 127 houses moved up a band, while 79 were moved down.

There has been no suggestion that the homeowners moved up a band will have to pay any underpayments, with the new bands introduced from August 1. However, those who were paying too much will be now contacted by the council over potential refunds.

Some of the houses which have been moved had been on the same band for more than 30 years.

It is unclear whether the council will be expected to hunt down previous owners for houses which changed hands or face claims from tenants who may have been responsible for paying the wrong council tax while renting houses from landlords.

One source said: “It is really very complex and we have no idea how far the refunds will go or how much it will cost.

"The decision by the board is unusual and has everyone scrambling for answers.”

Thought it was a scam

Residents in Haddington were shocked to receive letters last month from Lothian Joint Valuation Board (LJVB), which sets band levels, saying they were being moved – with the majority going up at least one band.

One resident said he though the letter was a scam when it arrived.

He said: “I’ve been a Band C since 1991, now I’m being told it should have been a Band D and my council tax will go up from next month. I couldn’t believe it.”

Gary Elliott, assessor for the LJVB, said of the changes: “Decisions to amend bands are not taken lightly but, where inconsistencies are found and a banding is clearly incorrect, it is the correct thing to do, not least to ensure all council tax payers are treated equitably.”

The council tax payment for 2022/23 for a Band D house in East Lothian is £1,314.69, while Band E is £1,762.84 – in 2017, when a decade-long council tax freeze was lifted, Band D moved up three per cent to £1,151.15, while Band E was £1,512.48.

In both cases, it means houses moved down from those bands would be entitled to about £400 a year refunds for each year they paid.

Mr Hampshire said: “Our council tax team will be updating our records to reflect the changes and will issue revised notices over the next few weeks.

“For residents whose property band has reduced with a retrospective effective date, and where there is entitlement to a refund of overpaid council tax, the team will be in touch as soon as possible to make arrangements to pay this money back.

“The financial impact of refunding overpaid council tax to those who are entitled is not considered to be significant when set against the income received from over 51,000 properties.”

The LVJB said that decisions over refunds were a matter for East Lothian Council.