But as Labour welcomed as a 'U- turn' the 'panic' decision by ministers, the Department of the Environment also said that those who had paid over the odds because of over-valuation would still be given rebates for the full period.
The move could affect up to 2 million households which the National Audit Office recently estimated had been put in the wrong band, partly because of the rush to have the new system in place as the poll tax was abolished.
Of those, about 1.1 million homes will benefit from not having their bills back-dated, while a further 900,000 will still be able to get the full rebate on their bills.
Douglas Henderson, a Labour local government spokesman, said it was good news for more than a million householders who the Audit Commission said had had their properties undervalued. He added: 'It would have been a scandal if the Government had made them pay for its blunders.'
The row flared when it emerged that the Inland Revenue Valuation Office Agency had moved properties into higher bands after sales of houses revealed the original estimates of values, using April 1991 as a base, were incorrect. Environment rules stipulated householders should be liable for back tax. But the situation was exacerbated when it emerged in a written reply from the Treasury that whole streets of similar undervalued properties could face the same move to a higher band because the sale of one house might force the valuation office to review the whole area.
Jamie Cann, Labour MP for Ipswich, put down the question after 93 houses in his constituency were moved into different bands after being sold: 77 moving upwards and 16 downwards. Yesterday he put down an Early Day Motion deploring the exercise in retrospective taxation and calling on the Government to cease the practice.
Within hours, David Curry, the local government minister, in another written reply, said bills for properties moved into higher bands would not be back-dated and would apply only from the time of revaluation, while rebates for those moved down would still be available.
Last night Mr Cann applauded the Government's 'sensible' decision. 'I'm glad they reacted so quickly to the problems I raised, though I suspect 5 May might not have been too far from their minds.'Reuse content