The effect of a successful appeal to the High Court by the Inland Revenue is that they will still have to pay two bills, one for the main property and the other for the conversion.
In one case in Norfolk, the double council tax bill for a Band F house and a Band A granny flat exceeded that paid by the Queen on her home in Sandringham, which is nearby.
The problem arose because the Inland Revenue appealed on a point of law against decisions taken by some valuation offices and tribunals that granny flats, particularly where they did not have their own entrances and where they shared bathroom and toilet facilities, should not be considered separate dwellings under the 1992 Local Government Act and should not be subject to separate bills.
On appeal, Mr Justice Ognall found in favour of the Inland Revenue.
This could also mean that carers who have made provision for their elderly relatives may be liable to pay the tax retrospectively to its introduction on 1 April, 1993.
An Age Concern official commented last week: "The decision will penalise people who are actively embracing the ethos of community care.
"It is grossly unfair, because carers who are saving the Government money on housing and health care are being singled out. The back-taxing, too, is ridiculous.
"The worrying thing is that it is the older relatives who will be assessed to pay the bills of the section of the property in which they are living.
"People will be horrified to learn they may have to pay for three years of council tax.
"Old people will be severely worried," the official said.Reuse content