Croydon landlords could be wrongly claiming back hundreds of pounds back from the taxman because of a council blunder.

Since July landlords have been paying discounted rates of £350 per property to sign up to Croydon Council's controversial new licensing scheme, after a legal challenge against mandatory licensing was thrown out of the High Court.

But because of an error in the council's payment system, invoices sent out to those who have bought licences have mistakenly shown VAT included - meaning that some landlords could be claiming back 20 per cent of their fee.

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Richard Dean, a director at Tax Assist Accountant in South Croydon, said: "Those landlords that are registered for VAT, they should be able to claim VAT with an invoice that has VAT on it.

"The legal responsibility for invoicing is the person issuing the invoice - in this case, Croydon Council."

Councillor Alison Butler, cabinet member for homes, said the mistake came from a generic payment system, and had since been corrected.

But she could not say what steps the council would take to ensure landlords were not claiming back VAT in error.

She said: "I would have to speak to somebody and get back to you on this.

"The only assurance I can give is that no VAT is being charged. The £350 is a flat charge."

Gina and Stephen Cannon live in Tandridge but own four rental properties in South Croydon.

Their invoice shows VAT as being included in licence charges for each property, and includes a VAT number at the bottom of the invoice.

Mr Cannon said: "They're going to get £7m to £10m from this scheme, but they can't even get a scheme in place to invoice the landlords that are paying."

"It's a pretty poor show. The system is rubbish."

Mrs Cannon added: "This is a legal financial document. Are they going to issue new ones? What if we had an audit by a tax inspector?"

Coun Butler said: "We haven't got a plan to [send out new invoices]. It's not a request as far as I know that's been made to us at the moment.

"If somebody felt it was necessary to do that, we would do."