From a discussion on another forum ...
Are the LA allowed to charge Council Tax on a caravan being lived in while a house is being built on the same site? If yes, how do they decide what band it should be in?
I think in practical terms, if you receive a letter demanding council tax and you are still paying council tax on your house while work is going on, chances are that they will accept that it is a temporary accommodation and duplicate tax will not be required.
Don't take this as gospel, but this is my understanding.