Business Property Relief for Furnished Holiday Lets: The Latest
The availability of Inheritance Tax Business Property Relief for owners of Furnished Holiday Lets has been put in doubt by a recent decision of the First Tier Tax Tribunal.
The recent Ross case focuses once again on whether a furnished holiday let can qualify for 100% inheritance tax relief. To date, the contention has been over whether the level of ancillary services has made the furnished holiday let a trade rather than an investment asset in order to qualify for business property relief for inheritance tax purposes.
This recent case in HM Revenue & Customs favour follows two other cases, the Pawson case and the Green case, which also hinged on whether sufficient services were provided.
HMRC challenged the taxpayer on the grounds that the level and standard of services provided were insufficient and also irrelevant. The tribunal judge agreed with HMRC that the quantity and cost of the activities provided by the taxpayer were insufficient to overturn the view that the business was mainly to do with the letting of land rather than the provision of holiday services.
HMRC also tried other arguments, including the capital values of the properties in question, but these were helpfully not considered relevant to the issue of whether the business was comprised of mainly investment or non-investment activity.
The decision may still be appealed.