September 20, 2018


Against a backdrop of cases won by H M Revenue and Customs, successfully challenging business property relief (BPR) on holiday let property, we now have two helpful cases that have been held in favour of the taxpayer. Previous cases have failed in their claim for BPR because the Tribunals found that the nature and extent of the additional services offered to guests during their stay were not enough to allow a claim. This meant that the activity was one regarded as an investment activity, akin to the letting of land or property, rather than trading, akin to that of a bed and breakfast or hotel. The most recent case was that of Grace v HMRC [2018] UK FTT 0306 (TC) which provides an insight as to the nature and extent of services required for HMRC to accept a BPR claim. The case concerned the deceased’s holiday letting business which consisted of four self-contained flats on the Isles of Scilly. The additional services provided to guests during their stay included the use of a heated pool, sauna, croquet lawn and games room, the hire of bikes and a golf buggy as well as the extensive input from the deceased’s daughter, Laura, during guests stays. Laura’s ‘particular personal care lavished upon guests’ was evidenced on the TripAdvisor reviews and ‘distinguished it from other ‘normal’ actively managed holiday letting businesses.’ She made herself available to guests during their stay providing help and advice about what they could do. She and other staff would take shopping deliveries into the accommodation and put the items in the fridge and take orders for fresh crab and other fish, collecting it from the local quay for the guests. On occasion she had been called upon for emergencies in the middle of the night and provided a taxi service to rescue guests lost on the island. On arrival guests were offered tea and cake. Guests could help themselves to produce from the garden and barbecues and other parties and events were organised for the guests. Overall the Tribunal concluded that this was an exceptional case which did, just, fall on the non-mainly investment side of the line – the services provided in the package more than balanced the mere provision of a place to stay. An intelligent businessman would, in the Tribunal’s view, regard it as more like a family run hotel than a second home let out in the holidays. This case is helpful not only to holiday letting businesses but to other diversified farm activities such as livery businesses. It gives us some assurance that by applying these principals we can better plan for protecting BPR on pure holiday letting businesses. Providing the evidence of the availability but more importantly the use of additional services by guests is crucial to protect a claim. In particular, in this case they were able to show a detailed breakdown of the hours spent on additional services compared to the other ‘normal’ holiday letting activities.


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