Landlords may be mistakenly claiming back VAT they are not entitled to because of an error by a local council.
The Croydon Guardian newspaper says landlords have been paying £350 per property to sign up to the local council's controversial new licensing scheme.
However, an error in the council's payment system meant the invoices sent to landlords have shown that VAT was included in the £350. As such, landlords receiving the invoices could claim back 20 per cent.
A council spokeswoman quoted in the Croydon Guardian says that the error is now being corrected but could not say whether or how the authority would ensure landlords were not mistakenly claiming back the tax.
This is the latest in a series of controversies surrounding Croydon council's attempt to issue these licences.
At the start of the summer the Croydon Property Forum, a group of property professionals in the Croydon area, failed to overturn the local council proposal to introduce compulsory licensing of landlords.
Croydon council claims the scheme would raise standards of accommodation and tackle alleged anti-social behaviour in the private rental sector - the standard justification for such licensing by local authorities around the country.
The scheme was agreed by the council shortly before the former coalition government announced that such licensing regimes would require explicit ministerial approval in future.