When you purchased the property did you buy as a converted bungalow?
if this was the sellers stance I would suggest that you follow a similar line. If the roof had been raised then I would suggest it would be a different story.
In terms of council tax banding, this is not my areas of specialism.
Tax banding is based on the value of the property, it may increase due to that but I would suggest that this is verified by a surveyor valuation.
