CORNWALL Council faces a potential £15.6-million bill this year after a loophole allowed holiday homeowners to claim back decades of council tax, with some refunds stretching as far back as 1993.

The authority has already paid out around £10-million since April, according to councillor Adam Paynter, its portfolio holder for resources. He warned the cost could rise by another £5.6-million by the end of March.

The issue centres on holiday lets qualifying for small business rate relief. Owners who switch from council tax to business rates can claim a refund of council tax paid before the property moved onto the business rates system.

But while homeowners can seek refunds dating back up to 33 years, councils can only recover lost business rates from central government from April 1, 2023.

Cornwall has identified nine cases where refunds reach back beyond 2015, including two claims covering the full 33 years. The cost to the council can reach £60,000 for a single property.

Mr Paynter said: “If our budget’s £15-million down this year, a lot of it is to do with the backdating and changing [of council tax], which seems inherently unfair. We need to change the system because it will be affecting other councils, just probably not to the same extent.

“It’s ridiculous that you can claim back up to 33 years’ worth. I just don’t see what other forms of compensation go back that far.”

Cornwall is particularly exposed because it has the largest number of holiday lets in the country. There are 12,244 self-catering properties assessed for business rates, with 9,970 receiving small business rate relief, according to Mr Paynter.

To qualify for business rates, owners must show a property is available to let for at least 140 nights a year and has actually been let for 70 nights in the previous 12 months. Properties with a rateable value below £12,000 qualify for full small business rate relief.

Cornwall has 800 fewer properties paying council tax than a year ago, partly because owners have switched to business rates.

Homeowners whose council tax band is reduced can also claim a refund. They can claim the difference back to when they moved in or 1993, whichever is later.

MPs Jayne Kirkham (Truro & Falmouth) and Ben Maguire (North Cornwall) have raised the issue in Parliament and with housing minister Matthew Pennycook.

Mr Maguire said backdating to 1993 was excessive, suggesting three to five years would be fairer. He also raised concerns about owners renting properties to family and friends to meet the 70-night threshold, and said enforcement was poorly funded.

He backs mandatory licensing, saying holiday let’s make up 60 per cent of housing in some areas and threaten schools and fire services.

Ms Kirkham also backs stronger controls, including safety certificates, public liability insurance and regular inspections.

She said: “We do value our holiday lets and our tourism industry, but it just feels like the balance is out of kilter and it needs correcting.”

The government plans to introduce a short-let registration scheme.