Audio - John Endacott provides an update on the FHL Rule changes

2012-02-28T00:00:00+1:00

Having recently presented at a series of seminars around the South West, John Endacott, Tax Partner at Francis Clark, talks about the current situation of the furnished holiday letting rules:

In this second recording, John continues to look at the points that need to be taken account of when businesses and individuals are dealing with tax on furnished holiday lettings.

Contact John for further information.

Finance Act 2011 Analysis - FHL's

2011-08-08T00:00:00+1:00

Finance Act 2011 changes the furnished holiday letting rules that have been in place for 27 years. The rules now apply to properties throughout the UK and the EEA but are dealt with as two separate property businesses for income and corporation tax purposes.

To read full article as published in Tax Jounal please click here.

To view full issue of Tax Journal - Finance Act Special Issue - click here.

John Endacott talks to Financial Times

2011-02-28T00:00:00+1:00

John Endacott shares his expertise on the issues surrounding the changes to furnished holiday letting rules in an interview with Tanya Powley of the Financial Times.

In an article where she explores the best ways to maximise the benefits of the current loss relief rules, John Endacott comments "The good news here is that, as long as a business meets the current limits for the coming tax year, then it will continue to qualify for the following two years after the new limits have been introduced - as long as the property is available for 210 days in each of the following two years and there is a 'genuine intention to meet the letting condition',".

The article was published in the Financial Times on 25 February 2011. Click here to read the full article at FT.com.

Last chance to comment on new holiday let rules

2011-02-04T00:00:00+1:00

New rules on furnished holiday lets will make it more difficult to let certain properties, reduce the number available and act as a barrier to new entrants to the industry.

That is the verdict of a Westcountry expert on holiday lettings who is urging affected businesses to express their concerns to Government before consultation on the new rules ends next week (February 9).

John Endacott, tax partner at accountants Winter Rule in Truro and a prominent commentator on the issue of furnished holiday lets, said the revised rules would lead to significant changes in the industry.

They say that holiday lets must be available to let for 205 days in a year (up from 140) and actually let for 105 days in a year (up from 70), which could see more marginal properties in less popular areas fail to qualify.

The Government is also tightening up on the ability to offset trading losses against profits, something which Mr Endacott said could deter new entrants to the industry trying to let properties with no letting record.

He said: “I’ve no doubt that these new rules will result in consolidation in the industry because the lettings targets are going to be onerous for some owners and planning restrictions may actually prevent some properties from meeting the 210-day requirement.

“The new regime around trading losses is also very restrictive and means it will take a very long time to get tax relief on start-up losses. That will be a barrier to new entrants and high investment into single units does not look like a good business model.”

Mr Endacott said the new rules would probably lead to more owners with greater numbers of furnished holiday lets, but he was hopeful that owner-occupiers of holiday let complexes may be exempt.

He added: “Winter Rule will be making further representations to the Government before next week’s deadline so if anyone wants to get in touch they can email me at taxcampaign@winterrule.co.uk.”

Finance Bill 2011 - Latest consultation document

2010-12-17T00:00:00+1:00

Read the latest consultation document from HM Treasury on the draft legislation on Furnished Holiday Lettings as part of the Finance Bill 2011 measures.

Click here to read the latest consultation document from HM Treasury.

Deadline looms for holiday let consultation

2010-10-14T00:00:00+1:00

Deadline looms for holiday let consultation

Owners of furnished holiday lets have until next Friday (October 22) to respond to a Government consultation into changing the way their properties are taxed.
The previous Government provoked uproar last year when it published plans to scrap the existing rules, through which owners can enjoy a number of tax advantages.
This sparked fears that the quality and volume of holiday letting stock would decline, costing the UK’s tourism economy hundreds of millions of pounds in lost revenue, and thousands of jobs. But in June Chancellor George Osborne said he would not scrap the rules, and instead published a consultation document aimed at amending them to bring them in line with EU law. That consultation ends next Friday.
The main changes include plans to increase the minimum period for which a property is available to let to the public from 140 to 210 days each year, and increasing the days when it is actually let from 70 days to 105 days, or 15 weeks.
The proposals also restrict the use of loss relief from furnished holiday lets, whereby losses can be set against other income to reduce tax liability.
John Endacott, a tax expert from accountants Winter Rule in Truro, was among those who led the charge against the original proposals to scrap the rules. He has since worked closely with Treasury officials to help inform the new policy, based on feedback from holiday let owners across the UK.
“The Treasury has come an awfully long way from Labour’s original scorched earth proposal, helped in no small measure by a new administration, and the increase in the time limits for letting is a practical and sensible approach,” said John.
“However a 15 week actually let limit could penalise properties in the South West particularly in more inaccessible locations such as West Cornwall, the Lizard and North Devon. In particular it could cause problems for new start holiday lets with no trading record, or in a tax year when there is no Easter break. We need to try and get to a better solution. A 30-week let period spread over two years could be a more flexible approach. “Having said that we have resolved a number of issues in discussions with Treasury and officials from H M Revenue & Customs over the last 18 months and we have worked on developing better guidance for owners. But there is still more that could be done and there are a number of transitional issues still to sort out. We are continuing to work with government officials on this.”
The Government is expected to respond to the consultation by the end of the year, and intends to implement the changes in the 2011 Budget.

New Consultation Document

2010-07-27T00:00:00+1:00

Read the latest consultation document from HM Treasury on the proposed changes to the special tax rules for furnished holiday lettings.

Click here to see the new consultation document.

Western Morning News Article

2010-07-06T00:00:00+1:00

We're not out of the woods yet on holiday let tax changes

John Endacott from Truro accountants Winter Rule looks at reform of holiday let tax rules.

Since April last year owners of self-catering accommodation have been concerned about a proposal to remove special tax reliefs that apply to them.
The surprise announcement of a repeal of these tax reliefs was included in the Spring 2009 Budget and raised fears that it could lose the Westcountry's tourism economy millions of pounds a year as holiday let businesses were forced to shut up shop or properties were removed from the letting market.
Since then I have been involved in raising concerns over the impact of any changes to these rules and even though we have had a change of government, the issue has not gone away.
The motivation behind the original repeal announcement by the Labour government was that the special tax rules were previously restricted to properties situated only in the UK. This conflicted with European law so the government had to make the rules apply to properties throughout Europe, which they now do. But that raised the spectre of UK taxpayers' money being used to subsidise foreign self-catering holiday providers. And there was a concern that the previous rules were being abused and that this would increase because of the extension to more properties throughout Europe. So using the proverbial hammer to crack a nut, Labour decided to scrap the tax reliefs altogether. The Conservatives promised a different approach whilst in opposition but it was unclear how this would be dealt with by the new coalition government.
Prior to the emergency Budget last week, I was in contact with the new Treasury team dealing with this issue and discussed their ideas about how to resolve the matter.
I urged caution over any premature announcement and stressed the need for consultation to ensure that a suitable solution could be worked out. I am pleased to say that this is the approach that is now being adopted, which is very good news. The Chancellor pledged last week to consult and defer any changes until April of next year.
However, one of the difficulties in discussing this with the Treasury and Revenue officials to date has been the paucity of available statistics on which to base a policy decision.
The current rules require a property to be let commercially, to be available for letting for at least 20 weeks in a year and actually let for at least 10 weeks. These time limits were introduced in 1984 after consultation with the tourism industry as the then Conservative government had originally wanted higher thresholds. The new government now wants to raise these thresholds to restrict the financial cost of some of the tax reliefs to the Exchequer. Whilst at first sight this seems a
good solution, it has the capacity to damage badly some parts of the tourism sector in the Westcountry in particular.
The logic of the change is that holiday properties on the Continent typically have shorter seasons than the UK. Many properties are simply not designed to be occupied in the close season. Therefore by increasing the number of weeks that a property must actually be let it is possible to reduce any subsidy being paid to owners of non-UK properties.
Fair enough, but whilst properties in the Lake District can be let all year round, that might not be true of West Cornwall or North Devon and other areas throughout the UK.
If it becomes necessary to actually let a property for 20 weeks then that would be the same as five months of continuous occupation - that sounds challenging. A limit of 15 weeks might work but the policy still needs to be based on more than just guesswork.
A further problem concerns new properties being brought into letting because it takes at least a year to build up trade. If the rules are tighter it will be hard to achieve the threshold in the first year - and that is when all the costs are incurred. Consider also the possibility of another Foot and Mouth outbreak and the impact that would have. A high threshold would mean no properties qualifying over a significant area for an entire season and that would cause real problems for the
investment to be able to get the tourism sector back on its feet again. If the tax authorities are concerned about abuse of the existing rules then perhaps those rules should be better policed rather than changed. Properties must be let commercially, so that already rules out casual letting of holiday homes to friends and family.
Should the Revenue remain concerned that there will now be more abuse because of holiday homes on the European mainland then we need to work with the appropriate officials to overcome these concerns, develop better guidance and agree new restrictions, if necessary.
During the course of my discussions with the relevant specialists at the Treasury and Revenue in London it is also clear that there are some particular problems for holiday complex owners and these also need to be covered off. A more sophisticated approach is therefore required to dealing with this issue and I hope we will now be able to develop that with this new government. If
anyone wants to be kept abreast of developments they can email me at taxcampaign@winterrule.co.uk.

Budget Announcement - Furnished Holiday Lettings

2010-06-24T00:00:00+1:00

Furnished Holiday Lettings
Budget Announcement

In the Budget on 22 June 2010 the new coalition government announced the following:
“The Government will publish a public consultation over the summer about plans to
change the tax treatment of furnished holiday lettings from April 2011. The consultation
will specifically look at a proposal which would:

Ensure the FHL rules apply equally to properties in the EEA;
Increase the number of days that qualifying properties have to be available for,
and actually let as, commercial holiday letting; and
Change the way in which FHL loss relief is given.

Full details about the proposed changes will be published over the summer.

Draft legislation will be published in the autumn, with a view to inclusion within Finance Bill 2011.”

A Hospital Case - Taxation Article

2010-06-10T00:00:00+1:00

A Hospital Case

A little over a year ago, I was happily minding my own business when I was surprised to discover in the Budget that the special rules for furnished holiday lettings contained in Chapter 6, Part 3 ITTOIA were to be abolished. I was not alone in being caught out by this announcement and there has been something of a cause celebre since. In the period since the announcement I have spent a considerable amount of time on this topic and have had cause to revisit a number of routine matters of practice and every day assumptions. The result is a greater appreciation of the tax rules on the distinction between trading and income from land and property and a realisation that this issue goes far beyond the simple matter of the potential repeal of the furnished holiday letting rules.
It is still not clear what the outcome of the proposed repeal of the furnished holiday letting rules will be. An announcement is expected as part of the Budget on 22 June. Given that the repeal provisions were dropped from the Finance Bill prior to the dissolution of the last Parliament then it is to be expected that the Coalition Government will not reintroduce the provisions as originally announced. Instead the most likely outcome is a retention of the existing rules but with an increase in the 140 and 70 day limits in subsections 325(2) and (3) ITTOIA respectively together with a restriction of the existing tax reliefs. This is in line with the comments made by George Osborne prior to the election. There was certainly an implication that tax relief for interest on borrowings could be restricted and we are already expecting a restriction of capital allowances in any event.
However even if the existing rules survive largely unchanged then for some operators there is still an element of the genie having been let out of the bottle whatever the outcome. The reason for this is that it seems that in many cases where I had understood that the furnished holiday letting rules applied then it seems that in fact a trade may be being carried on in accordance with case law. I hasten to add that I do not believe that I was alone in my previous assumptions.
I did consider the existing furnished holiday lettings provisions in “The End of the Holiday” in Taxation (21 May 2009) and in that article I covered the lead case on furnished holiday letting of Gittos V Barclay [1982 STC390]. In that High Court case Justice Goulding concluded that the taxpayers activities in the letting of two Cornish properties “were not significant enough to make her a trader and not a mere landowner who derived an income by exploiting her property”. So, is that the final word on the case law on the subject. Well no, not really.

The Rotunda Hospital Case

There are three cases that are worth considering further and the first one relates to a charitable maternity hospital in Dublin and the letting of the Rotunda Rooms prior to the First World War the Rotunda Rooms were constructed in the late 18th Century to provide an income for the hospital to cover maintenance costs etc. The building was connected with the hospital by an internal passage and the rooms were let by the hospital charity for entertainments, concerts, cinema shows etc. The letting periods varied from one night to up to six months and the letting price included the use of seating and heating. Further charges were made for gas and electric light based on the usage shown by the respective meters. A substantial income was derived from this activity.
The case proceeded through the Special Commissioners, the Irish High Court and then the Irish Court of Appeal until it eventually reached the House of Lords. Whilst the Special Commissioners found that the activity amounting to a trade, the High Court and the Court of Appeal both held that the income was that from land and property. And I have to say at first sight it seems surprising that this income could be anything other than income from land and property. However the House ofLords held that it is income from trading. Why? In giving judgement, the Lord Chancellor stated that the hospital “retained control of the premises, select the persons to whom the user is granted and regulate the conduct and behaviour of the persons allowed to resort thereto, and, for the purposes of enabling or facilitating the making of contract for such user, they have properly fitted up the Rooms with fixtures, fittings and other things – some at least being clearly chattels – and provide attendance and other services”.
So there are two crucial deciding points that come out of this:
1. the retention of control of the premises, and
2. the provision of services.
These are the points to look out for in establishing whether the property is being exploited in the course of a trade or whether another person is being allowed unfettered use of the property. But given that this case is over 90 years old then how has this principle developed since.

Salisbury House

Well a decade later there was another significant case which touched on this issue. Salisbury House Estate Limited v Fry [1930 15 TC266] is a well known case involving the owner of a large office block let to tenants as unfurnished offices. The company had no other business except the letting out and management of the one property. The company maintained a sizable staff to manage the property and undertook all the usual management services. The property consisted of 800 unfurnished rooms let out to some 200 tenants with 78 leases for periods ranging from 2 to 21 years together with 89 tenancy agreements and 26 informal tenancies. But whilst the scale was large, it was still only letting income.
So in the Salisbury House case, whilst the owner was clearly in occupation of the property in terms of the common parts, it gave clear property rights to the tenants for their individual offices and the services were no more than one would expect from a landlord being management of the common areas.
This case picks up the oft quoted cry of buy to let landlords with large portfolios of properties who try to maintain that they are trading. Indeed in discussing the proposed repeal of the furnished holiday letting rules with the government officials it is apparent that there is a desire by some to try and level out the playing field (as they see it) between holiday accommodation providers and buy to let landlords. But, the key point is that in itself – size does not matter.

A More Recent Case

Roll on another 50 years and in the period of uncertainty prior to the introduction to special rules for furnished holiday letting, there was the Gittos V Barclay case but also another significant case in the form of Griffiths v Jackson [1983 STC184]. This was a High Court case, again from the West Country, involving the letting of furnished accommodation mainly to students in Bristol. Whilst the General Commissioners determined that the profits derived from a trade, the High Court held that it amounted to land and property income.
Whilst there was a substantial level of activity involving 11 properties, there was no significant provision of other services with these being limited to some laundry and linen services and arrangements for cleaning of rooms and gardening. Food and car hire could be provided on request. Again this all looks very much like land and property income.
However, what is particularly interesting about this case is that it draws out the key distinction between the Rotunda Hospital case and the position in Salisbury House (both of which were cited in the case). The taxpayers in this case tried to argue that their position was no different from that of an hotelier or lodging house owner and argued that their position was similar to that in the Rotunda Hospital case. Justice Vinelott considered this and in particular that in the Rotunda Hospital case, “the taxpayers remained in legal occupation of the entertainment rooms and retained control over them. The income was not derived from their property in the rooms, as it would have been if they had parted with legal occupation to someone who had carried out the activities of providing the rooms for public entertainment. That was the ground on which the Rotunda Hospital case was distinguished in the Salisbury House Estate case”. He went on to quote Viscount Dunedin from the Salisbury House case referring to the fact that “the hospital was held to be in occupation of the whole premises”. And Lord Atkin from the same case stating that “possession and occupation of the rooms remained with the [hospital]”.

Back to Furnished Holiday Lets

So what does this all mean? Well, where the owner of the property is in occupation of the whole of the premises then a relatively modest amount of other services will be sufficient to constitute the carrying on of a trade. The services simply need to be above the level of that of a mere landlord. As a result, it is very clear that hotels will, almost without exception, qualify as trading businesses.
But what about furnished holiday letting complexes?
In the South West, it is very common to have complexes of several holiday letting units together with owners’ accommodation. There may be a laundry room, swimming pool, children’s play area and some other facilities. Typically these properties are converted farm buildings and comprise one integral unit. Such properties are not restricted only to the South West and I have been in contact with many such businesses throughout the UK.
In such cases, it would therefore seem that on the basis of the established case law that the activities amount to a trade rather than being taxed under furnished holiday letting rules. That being so, this will continue to be the case regardless of whatever decision is made by George Osborne in the forthcoming Budget. Whilst this is certainly beneficial from a capital gains tax point of view (and probably from an inheritance tax point of view even though the test is slightly different)it does mean that a liability to national insurance arises.
I do not know how many businesses might potentially be affected by these considerations but it is certainly clear that a number of them need to reconsider the basis on which they are self assessing their activities for tax purposes and it is hoped that some further guidance might be forthcoming from HMRC.
Such properties are more directly affected by the Rotunda Hospital case than many other let properties because of the nature of the activities and the fact that owners tend to typically live on site.
Much like the expectant mothers in Dublin, we wait to learn the outcome of the furnished holiday letting saga in the public entertainment of the forthcoming Budget!
John Endacott is a tax partner at Winter Rule LLP and has been involved in discussions with H M Revenue & Customs and H M Treasury in respect of the proposed repeal of the furnished holiday letting rules on behalf of the Tax Faculty and in conjunction with the CIOT.

The above article was published in Taxation on 10 June 2010

Taxline Article

2010-01-22T00:00:00+1:00

The following article appears in the January 2010 edition of TAXline – the journal of the Tax
Faculty of the Institute of Chartered Accountants in England & Wales

Furnished holiday lets - where are we after the PBR?

John Endacott explains what the Tax Faculty is doing and offers some practical suggestions for advisers.

The Budget on 22 April 2009 included the surprise announcement that the special rules relating to the commercial letting of furnished holiday accommodation were to be withdrawn with effect from 6 April 2010. The apparent explanation behind this was that the furnished holiday letting (FHL) provisions were incompatible with European law as under the existing legislation they could only apply to UK property. The Government accepted in the Budget announcement that this practice was discriminatory and so decided to apply the existing rules to properties throughout the European Economic Area (EEA) but then to withdraw the rules in their entirety from 6 April 2010.
The FHL rules are contained in Chapter 6, Part 3, Income Tax (Trading and Other Income) Act 2005, and permit such commercial lettings to get tax advantages which are available to traders but not to property owners more generally (eg the offset of losses against other income and CGT reliefs such as entrepreneurs’, rollover, and holdover for gifts of business assets).
There has been much comment on this announcement including Anita Monteith’s briefing in TAXline in November 2009. In this briefing I do not wish to go back over old ground but rather to explain the action the Tax Faculty has taken in response to this proposed change and also to consider the implications of the further announcements contained within the documents released at the time of the Pre-Budget Report (PBR) on 9 December 2009.

Representations made by the Tax Faculty

Over the last few months the Tax Faculty has made specific representations on the practicalities of extending the FHL rules to properties in the EEA. There are a number of detailed issues that arise from the existing legislation and it was clear that these points had not been considered in any detail by HMRC prior to the Budget 2009 announcement.
The Tax Faculty has also made representations on the practical implications for our members in advising clients as to whether or not they are carrying on a trading business of providing holiday accommodation or have income from a property business which is currently within the special rules. These representations were made in conjunction with the Chartered Institute of Taxation and the Institute of Chartered Accountants of Scotland. To back up our comments we gathered a number of specific examples from members that highlighted the difficult issues on the divide between trading and investing activities. We explained to HMRC and HM Treasury that this issue would be faced by all practising accountants in advising their clients once the FHL rules are withdrawn and we further emphasised that it was precisely because of these difficulties that the special rules were originally introduced back in 1984.
The input of the Tax Faculty was welcomed by HMRC and HM Treasury and we were promised further clarification of the details of the new rules in the PBR. In particular we were promised detailed guidance as to the dividing line between trading and investing activities.

The following three documents were then released on 9 December 2009:

A technical note entitled Withdrawing Furnished Holiday Letting Rules from 2010–11;
Draft legislation to repeal the furnished holiday letting rules from 2010/11; and
An impact assessment of withdrawing the furnished holiday letting rules

These documents (which are available on the HMRC website) confirm the original policy proposal but in addition they do add more detail. As a result there are some practical points that should now be raised with clients.

Practical points
It is unlikely that the draft legislation will have been included in a Finance Bill by 6 April 2010 and even less likely that it will have received Royal Assent. It is therefore possible that the legislation could change further. However, the following points should be considered.
1. The deemed trading status of FHLs for loss relief purposes will cease for income tax after 2009/10 and for corporation tax in respect of accounting periods commencing on or after 1 April 2010. There is therefore a last opportunity to take advantage of sideways loss relief and the ability to carry back losses in 2009/10.
2. It is possible to allocate profits or losses from a FHL between a married couple in whatever way the couple chooses (s 836, Income Tax Act 2007 (ITA 2007)). From 6 April 2010 this flexibility will cease to be available and married couples will need to undertake more long-term planning as to how income is to split between them. An unequal split will only be possible where the beneficial interests are varied by means of a declaration of trust and the requirements of s 837, ITA 2007 complied with, including notifying HMRC within 60 days.
3. As a transitional measure the unrelieved tax written down value on the capital allowance pool will be carried forward and will continue to qualify for writing down allowances for 2010/11 and subsequent years. However new expenditure in a dwelling house will not qualify for capital allowances and instead will get the 10% wear and tear allowance. An interesting quirk is that capital allowances are only precluded on expenditure within the dwelling house. It would seem that expenditure on items outside of the dwelling house, such as swimming pools, children’s play areas, gym equipment and laundry rooms, will continue to qualify for capital allowances, although the relief will be given under the rules on property income rather than as a deemed trade. There are still some ongoing planning opportunities here, especially as in certain circumstances such capital allowances can be relieved against other income.
4. As far as the capital gains tax position is concerned then holdover relief and rollover relief will cease to be available in respect of transactions on or after 6 April 2010. However the position on entrepreneurs’ relief is more encouraging as the cessation of the FHL activity as a trade on 5 April 2010 will trigger the ability to sell off FHL properties within the following three years and still qualify for entrepreneurs’ relief (as long as the other conditions are met). As such, on the basis of the existing tax rates then a 10% tax rate on capital gains will continue to be available until 5 April 2013. This is already encouraging a number of FHL complexes to sell up next year.
5. The HMRC technical note does give some very limited guidance on the distinction between a trading activity and a property business. However the guidance is woeful as it is far too limited to be of much practical use. It does make clear that in HMRC’s view very few existing FHLs are likely to qualify as trades.

Also, there are a number of businesses which contain FHL income and which are returned as trades. It is not clear whether or not the abolition of the current rules will change the nature of those wider trades. The best examples are farmers letting holiday accommodation or hoteliers or campsite owners who also have FHLs.
HMRC seems simply unwilling to give us any further guidance on this point which will inevitably result in considerable uncertainty for all concerned and will lead to a disproportionate amount of time and effort by members in advising clients.
European Law and discrimination
For periods prior to 6 April 2010 it is unclear whether a brought forward FHL loss in the EEA can be used against a property business in the UK. Certainly it would be possible to do this for a UK FHL property so it is unclear why it should not be possible for a property located in the EEA. However there seems to be a continuing distinction between UK property income and foreign property income that seems fundamentally discriminatory. While it is difficult to justify the time involved given the small sums of tax relief at stake, members should still consider making protective loss claims.

It remains to be seen whether or not there will be any change of heart on the proposed abolition of the FHL rules especially if there is a change of government. However in the meantime members can only advise their clients on the basis of the proposed changes and there are already a number of action points to address.
John Endacott is a tax partner at Winter Rule LLP and a member of the Tax Faculty’s SME Business Tax Committee. He has represented the Faculty in discussions with HMRC and HM Treasury on the proposed changes to the FHL rules.

Western Morning News Opinion Article

2009-12-11T00:00:00+1:00

Standfirst: The Government is to press ahead with controversial changes to the tax rules on furnished holiday lets, in a move that could cost the Westcountry economy tens of millions of pounds. Tax expert John Endacott, from Cornwall-based accountants Winter Rule LLP, looks at the issue.

As part of his Pre-Budget Report (PBR), Alistair Darling finally gave us the details of the abolition of the special tax rules on furnished holiday lets.

A half-baked surprise announcement on 22 April this year has now been followed after 231 days by the much promised detailed proposals. Sadly, anyone expecting an early Christmas present will be disappointed. It is as if you have spent nearly all year dropping hints as to what you really wanted and all you get is disappointment on the big day.

It has been an anxious time for many letting businesses over another wet and dreary season, and the last thing the South West economy needed is more potential bad news in one of its key industries. The uncertainty has been damaging investment at a time when we need all the help we can get, and some of the scaremongering hasn’t helped either. So who is affected?

The Furnished Holiday Lettings rules were introduced in 1984 and allow owners of holiday lets to enjoy the same tax advantages as those running other tourism businesses like guest houses and B&Bs to give a ‘level playing field’.

The rules apply to the splitting of income between spouses, capital expenditure, loss relief and capital gains on sale. That is all. Normal day to day expenditure qualifies for tax relief anyway and so is not governed by these special rules. Also, VAT, business rates and inheritance tax are governed by entirely separate provisions which are not being changed.

To qualify for these special rules, the property must be available for letting commercially for certain minimum time periods. Although there is some debate about these thresholds, they prevent casual letting of second homes from benefitting from any preferential tax relief.

However, one further qualification was that the property had to be located in the UK. In April’s Budget, the government accepted that this restriction was discriminatory and so decided to abolish the rules in their entirety. Unfortunately, this conclusion was reached with little thought or analysis.

Twice this summer I met with the Government officials responsible for this policy and subsequently submitted detailed evidence to support our concerns as part of the submission by the tax professional bodies. Our comments were not sensationalist or alarmist, and in the main, stressed the need for certainty for taxpayers. At the heart of this issue is when is a furnished holiday let a trade?

We explained that those providing furnished holiday lets are engaged in the holiday accommodation industry and are similar in nature to hotels. The bureaucrats disagreed and said that it is merely investment income, like rent received without any work by the owner.

We explained about the industry and the disappearance of traditional hotels and guest houses and the increase in self-catering accommodation. We highlighted the position of hotels that provide self-catering accommodation, and indeed, if a hotel does not provide breakfast, because it operates on a room only basis, then is that letting of property or carrying on of a trade?

We explained that many self-catering properties now cater for very short stays, in a similar way to hotels and have hundreds, if not thousands, of visitors in a year. We asked what the determining factors were to be for property owners in the South West in order to decide whether or not their activity was a trade or merely the letting of property.

Subsequently we submitted examples to help the Treasury consider these points, many of which came from Western Morning News readers with furnished holiday lets. The Treasury said our examples had been ‘helpful’ and that it would publish additional guidance in the PBR.

So on the big day what did we get? Woefully useless guidance that does not help reduce the uncertainty at all.

All it makes clear is that H M Revenue & Customs does not believe that the owner of a furnished holiday let is carrying on a trade, even where that is a large complex, with ancillary facilities. Nor is there any clarification on the position of farmers who have diversified into letting.

This goes to the heart of the issue because the Government’s own Impact Assessment of the rule changes is based upon the 60,000 personal tax returns in 2007/08 that include furnished holiday let income. These returns are only for individuals and exclude companies, trustees or cases where the taxpayer may have returned the income as part of other activities.

Whilst it may at first seem reasonable to prepare a policy on the basis of the tax returns that include furnished holiday let income, it simply does not reconcile with the facts on the ground. This was a point that we stressed in our discussions and were incredulous at the figure of just 60,000 owners. Put simply, the tax authorities and the tourism bodies (including the government agencies) can’t both be right on the impact of this policy change.

The impact assessment talks about income from these 60,000 FHL owners of £530 million in 2007/08. Depending on the average income for property used, this would suggest a total number of properties of somewhere between 15,000 and 30,000 - more probably at the lower end of that range. This sounds more like the number of furnished holiday lets in West Cornwall than the amount nationwide. The conclusions of the impact assessment may well be correct, but it does read like a dodgy dossier. The tourism industry in the South West deserves a better Christmas than this.

The special rules were originally introduced following uncertainty over the tax status of furnished holiday let income as a result of two court cases. A hiatus followed including political pressure in the 1983 general election campaign and the new Parliament brought in the rules despite government resistance.

This is all sounding very familiar and the real issue now is going to be the attitude of the opposition parties. The likelihood is that the abolition of the rules will not be considered by this Parliament but by its successor because there simply will not be time for a full Finance Bill before a May or June election. There is more work to be done on this and at the very least clearer guidance is required. My advice is therefore clear – lobby your MP.

Copy ends

Pre Budget Report Impact Assessment

2009-12-09T00:00:00+1:00

Read the Impact Assessment of Withdrawing the Furnished Holiday Letting Rules, produced by HM revenue and Customs.

Click here to read.

Pre Budget Report Technical Note

2009-12-09T00:00:00+1:00

Read the recently published technical note of the withdrawal of the Furnished Holiday Letting Rules from 2010/11.

Click here to read.

Holiday Let Changes threaten Investment, says Industry Survey

2009-07-27T00:00:00+1:00

Controversial Government plans to change the tax rules on furnished holiday lets will be a direct threat to new investment in the tourism sector, according to our new survey. We have established that the proposed removal of tax breaks on capital investment was highlighted as the top concern by 93% of holiday let owners and agents who attended a recent series of roadshows.

The Government announced in this year’s budget that it intends to scrap the so-called Furnished Holiday Lettings (FHL) rules from April of next year. Introduced in 1984, they allow the owners of holiday lets to enjoy the same tax advantages as those running other tourism businesses.

But the holiday let industry – which is worth more than half a billion pounds to the South West economy every year – says the changes will reduce the amount of accommodation on offer and cost the region’s tourism economy tens of millions of pounds a year.

Winter Rule tax partner John Endacott has been spearheading the South West campaign against the proposed changes and recently hosted six roadshows across Devon and Cornwall to raise awareness and gather evidence.

He said: “We surveyed everyone who attended our roadshows and the top concern is that these tax changes will damage investment in our holiday accommodation which is vital for the prosperity of the South West.

“Tax relief on capital investment is important in ensuring that accommodation is maintained and upgraded, so people are really worried that it could be lost. Owners also want to feel there is an incentive for long term investment in holiday units.”

Mr Endacott said the other main concerns centred on capital gains tax, followed by income tax loss relief and inheritance tax treatment.

He added: “We and the industry are quite happy to work with the tax authorities to stamp out abuses of any tax reliefs, and the Government seems most concerned about the potential for people to use trading losses on holiday lets to offset income tax. But the Budget announcement looks like an overreaction and will be detrimental to the South West economy.”

We will be presenting its findings to Treasury officials at a meeting next month and are hoping to influence the shape of draft legislation and an impact assessment that are expected to be published by Ministers in the autumn.

Holiday Let Campaign hits the Road

2009-06-23T00:00:00+1:00

The campaign against controversial Government plans to change the tax rules on furnished holiday lets, which could cost the Westcountry economy tens of millions of pounds, is stepping up a gear with the launch of an information roadshow.

Chartered accountants and business advisers Winter Rule, who specialise in tourism and are spearheading the campaign, have teamed up with the holiday letting industry to run a series of seminars in Cornwall and Devon.

The campaign is attracting interest from across the UK and has already won the support of South West Tourism and the Combined Association of Holiday Home Agencies (CAHHA), which has some 5,500 holiday let properties between its members.

The seminars, aimed at people in the holiday letting industry, will outline the potential impact of the changes on the sector, what steps businesses should consider taking, and how they can get behind the campaign.

Chancellor Alistair Darling wants to repeal the so-called Furnished Holiday Lettings (FHL) rules from April of next year. Introduced in 1984, they allow the owners of holiday lets to enjoy the same tax advantages as those running other tourism businesses.

The fear is that removing these allowances will impact on a wide range of businesses, damage investment, reduce the amount of accommodation on offer and cost the Westcountry tourism economy tens of millions of pounds a year.

John Endacott, tax partner at Winter Rule, said: “We’ve had a fantastic response to the campaign so far and have been contacted by owners, advisers and agents across England, Scotland and Wales. There is real concern about the impact of these proposals so the roadshow is an opportunity for local businesses to ask questions, share their concerns and help us gather the necessary evidence to lobby Ministers.”

Simon Tregonning, managing director of Classic Cottages, is involved in the seminar programme. His company manages about 700 holiday properties across Cornwall, Devon, Dorset and Somerset and is a member of CAHHA.

He said: “The Government’s plans are ill-conceived and threaten a key part of the South West economy by impacting on hard-working businesses. We want proper consultation on these proposals so that Ministers appreciate the depth of feeling and concern, and think again.”

The South West has some 62,000 furnished holiday let properties which accounted for 16% of all visitor spend – or £574 million – in the region last year, according to the latest United Kingdom Tourism Survey.

Self-catering visitors also stay longer and spend more – 6.3 nights on average spending £335 per person per trip, compared with 4.3 nights and £188 per person for other trips.

The Government has maintained that the changes are necessary in order to bring the UK in line with European legislation.

The six free Winter Rule seminars will be held on July 1, 7 and 8, and there will be morning and evening sessions. They will last about 90 minutes and include ample time for questions.

The dates and venues are as follows:

July 1: The Pavilion, Royal Cornwall Showground, near Wadebridge, starting at 10.15am; Lostwithiel Golf & Country Club starting at 5.15pm.

July 7: The Penventon Hotel, Redruth, starting at 10.15am; the Combined Universities in Cornwall, Tremough Campus near Penryn, starting at 5.15pm.

July 8: The Grand Hotel, Torquay, starting at 10.15am; Sandy Park, Exeter, starting at 5.15pm.

Taxation Magazine Article by John Endacott

2009-05-21T00:00:00+1:00

Taxation Magazine/2009 Volume 163/Issue 4206, 21 May 2009/Articles/The end of the holiday - Taxation, 21 May 2009, 502

Taxation, 21 May 2009, 502

21 May 2009

The end of the holiday

Features

Property Income

John Endacott is the entrepreneurial and private client tax partner at Winter Rule and has been shortlisted for the LexisNexis Tax Writer of the Year Award 2009.
© Reed Elsevier (UK) Ltd 2009

John Endacott considers the uncertainties caused by the proposal to put and end to the special tax treatment of furnished holiday lettings.
* * * * * *

Key Points

• The technical note on furnished holiday lettings in the EEA.

• The main provisions relating to the taxation of furnished holiday lettings.

• The conditions and the need for a commercial basis.

• Will there be a trade after April 2010?

• The National Insurance and inheritance tax implications.

• Join the consultation campaign.
* * * * * *

During the 1970s, self-catering accommodation became a more popular choice for families looking to take their holidays in the UK. There was dispute and confusion as to what extent the provision of such activities amounted to the carrying on of the trade and as a result, specific statutory rules were introduced for furnished holiday lettings (FHLs) in FA 1984. However, it was announced in Budget 2009 that this position is due to change from 6 April 2010.
No specific Budget Note was produced on the subject of FHLs. Instead, all we got was paragraph 5.116 of the Budget Red Book which states:

'Budget 2009 announces the repeal of the furnished holiday lettings (FHL) rules from April 2010. Until the repeal takes effect, the FHL rules will be extended to those qualifying furnished holiday lettings elsewhere in the European Economic Area.'

In addition, a technical note was published on Budget Day entitled 'Furnished Holiday Lettings in the European Economic Area' (www.lexisurl.com/FHL), but that gives no further details on the proposed repeal of the FHL rules. No provisions have been included in the Finance Bill -- presumably on the justification that the measures do not take effect until 6 April 2010 -- and one must therefore expect that legislation will be brought forward next year. As far as one can tell, there has been no consultation with any professional body or any tax professionals working in the industry, nor even within government, as officials at the Department for Culture, Media & Sport were equally shocked by the announcement.
The purpose of this article is to consider the implications of this surprise announcement and also some potential opportunities arising from the acceptance that the legislation extends to properties outside of the UK. Whilst I will focus on individual owners, the points raised are equally applicable to companies.

What are the FHL rules?

The main statutory provisions relating to FHLs are set out in the TABLE. There are also some other statutory provisions that are not dependent upon the statutory definition of an FHL, but that could also be impacted by any repeal or possible change of view. These include business property relief and National Insurance.
* * * * * *

Table -- Statutory References

Table -- Statutory References

ITTOIA 2005, Pt 3 Definition of FHL for income
Ch 6 tax purposes.
TA 1988, s 503 Definition of FHL for
corporation tax purposes.
TCGA 1992, s 241 Capital gains tax reliefs available
to FHL owners.
ITA 2007, s 127 Definition of trade to include
FHLs for income tax purposes.
ITA 2007, s 836(3) Ability to share profits unequally
on jointly held property.
CAA 2001, s 17 Entitlement of FHLs for capital
allowances as a qualifying
activity.

* * * * * *

The existing definition of an FHL has two legs:

1. the property must be let on a commercial basis with a view to the realisation of profits (ITTOIA 2005, s 323(2)); and

2. it must meet the relevant qualifying criteria (ITTOIA 2005, s 325).

It is important to understand the need for the accommodation to be let on a commercial basis and this does not appear to always be appreciated, particularly by unrepresented taxpayers. Whilst it is possible to set a loss arising from an FHL against other income under ITA 2007, s 64, the owner has to be able to justify why the loss arises in the first place. A loss in the first year of letting a property is quite usual (because of capital investment costs and lower occupancy and tariff rates) and it may be that losses occur in the second and possibly third year of a letting. However, if losses are incurred for more than three consecutive years, then it is hard to see how the letting is going to be justified as being commercial. Lettings to family and friends at reduced rates are not commercial and it is also likely to be harder to meet this test if there are very high borrowings on a property. Fundamentally, if the purpose of the acquisition of the property is for someone to acquire a holiday home for themselves, then it is going to be hard to meet the requirements in s 323. Therefore, most of the press comment already on the proposed repeal of the FHL rules is misplaced.
The qualifying conditions in s 325 require that the property is available for letting for at least 20 weeks, is commercially let to members of the public for at least 10 weeks and include a restriction to prevent continuous occupation for a period exceeding five months. This restriction is designed to allow a longer let of a property out of season, although this has become much less common since the rules were first introduced as the summer letting season has extended and letting in the half-term weeks of the autumn and spring terms and at Christmas and New Year at high rates has become much more achievable.

Occupancy levels

The 10-week and 20-week periods are possibly now on the low side, but the pattern of occupation of holiday accommodation varies around the country. Whilst all year round occupation may be achievable in the Lake District, it isn't possible in Cornwall! There also needs to be some allowance for lower occupancy levels in the first year of a letting and the potential for a bad summer in a business that is ultimately weather related. However, the rules do allow for averaging of occupation across multiple units and include special measures to deal with the calculation of the qualifying criteria in opening and closing years.
Where the relevant requirements above are met, the following provisions apply.

• The activity is statutorily defined as a trade.

• Capital allowances are available on furniture and furnishings.

• The trading loss reliefs apply.

• Roll-over, hold-over, entrepreneurs' and TCGA 1992, s 253 relief apply for capital gains tax.

From a commercial perspective then, the most important provisions are those dealing with capital allowances and capital gains tax reliefs.
These rules have all the advantages that come with being set out in the tax legislation itself and give complete certainty to those providing FHL accommodation and to the tax professionals advising them. Removing them from the statute is an entirely retrograde step as it would be far better to have a much more detailed definition of both trade and business incorporated within our tax legislation.

So what happens in April 2010?

If all of the statutory rules relating to FHLs are repealed, then it will be necessary to consider whether or not the provision of FHL accommodation amounts to a trade under general principles. In other words, we are back to where we were before FA 1984 and to the uncertain position that these rules were introduced to correct. Trade is defined in ITA 2007, s 989 as including 'any venture in the nature of trade'. Readers will be familiar with the lack of any further statutory guidance on this and it is then necessary to rely upon case law -- much of which is very dated and difficult to relate to modern facts.
A case that is more relevant is that of Gittos v Barclays [1982] STC 390, a High Court decision as to whether or not the provision of FHLs can amount to a trade. The taxpayer was unsuccessful, but the conclusion was not free from doubt and in due course, the legislation in FA 1984 followed. Justice Goulding stated that the central issue was whether or not the taxpayer's activities:

'were significant enough to make her a trader and not a mere landowner who derived an income by exploiting her property. It is not of course possible to give an answer to such a question in general terms. It is a question of fact and degree. I can quite see that there are forceful arguments on both sides'.

Whilst Justice Goulding was equivocal, he did state that he felt that the activities of an hotelier did amount to a trade as they were more substantial than that of someone operating FHLs. But these comments were made in 1982 and the world has moved on since then. Hotels were more traditional and the budget chains had not developed. Now it is common to book hotels on a room-only basis and in towns such as Newquay we have surf lodges with shared bunk rooms and negligible services. These are advertised on the internet alongside various types of self-catering accommodation, camp sites, holiday parks, guest houses and hotels. Which ones are trades in the absence of ITA 2007, s 127? In addition, many coastal hotel companies that are carrying on trades also provide FHL accommodation. Will this be treated as investment assets for the purposes of TCGA 1992, s 165 and s 169L such that more than 20% of the activities become non-trade? Are HMRC prepared for the number of COP10 applications for rulings on trading status that are going to follow in April next year?

National Insurance

There are no specific FHL rules in the National Insurance legislation. Therefore it is strictly necessary to consider whether or not the activities amount to a trade in order to establish whether Class 2 and Class 4 contributions are due. We have been conditioned by the self assessment return to view FHL income as being land and property income rather than self-employment income. As such, it is never returned on the self-employment pages and so liabilities to Class 4 contributions do not arise. However, potentially, the businesses concerned qualify as trades in their own right and so should be registered for Class 2 and Class 4. For those looking to maintain trading status, the registration of owners as self-employed come next April is going to be an inevitable step.
Interestingly, I have recently seen correspondence coming from the National Insurance Contributions Office asking various questions to try to establish whether or not the activities of an FHL can amount to a trade in its own right and so be liable to National Insurance. Therefore, HMRC does not appear to be of a single mind on this issue.

Business property relief

There have been some ill-considered comments regarding entitlement to business property relief on FHLs and the proposed repeal of the existing legislation. Whilst we do not know the detail of the proposed measures, IHTA 1984, s 105 is not reliant upon the definition of FHL within ITTOIA 2005, but rather on the definition of whether or not the activity amounts to a business.
HMRC have recently changed their view and indeed paragraph IHTM25278 of the Inheritance Tax Manual states:

'In the past, we have thought that business property relief would normally be available where:

• the lettings were short term; and

• the owner, either himself or through an agent such as a relative, was substantially involved with the holiday makers in terms of their activities on and from the premises.

'Recent advice from Solicitors' Office has caused us to reconsider our approach and it may well be that some cases that might have previously qualified should not have done so. In particular, we will be looking more closely at the level and type of services, rather than who provided them.

'Until further notice any case involving a claim for business property relief on a holiday let should be referred to the Technical Team (Litigation) for consideration at an early stage.'

I understand that HMRC are looking for cases to litigate in respect of FHLs. We have had no statement to the effect that the position on business property relief is to be amended, but it is quite possible that changes could be brought forward in the Finance Bill 2010, perhaps even as part of a wider review of this relief. The reference to 'the level and type of services' implies that the assessment is closer to that of whether or not a trade is being carried on than the traditional definition of business. Anyone looking to argue this point in the near future should carefully consider that. Also, the comments go beyond holiday cottages and complexes and extend to other facilities including self-service hotels.

FHLs and the EEA

Meanwhile, there is an opportunity to make claims for FHL status to apply to properties within the EEA and there is the scope to go back and amend previously submitted computations. For 2007 returns, HMRC have extended the amendment deadline to 31 July 2009 and full details are included in the technical note, including a list of EEA countries. Advisers need to reconsider previously submitted computations where appropriate, especially in respect of capital gains. However, foreign tax liabilities may make any reduction in the UK capital gains tax liability academic.

The need for consultation

The FHL rules were introduced for good reason back in 1984 and any repeal without thorough consultation should be resisted by the professional bodies and other interested parties. I have already been involved in detailed lobbying on behalf of our clients and other businesses in the South West and in conjunction with various industry groups. We are endeavouring to consult with HM Treasury, but in order to do this we need to obtain as much information as possible from affected businesses. Those who are interested in adding their voice to this campaign or wanting to receive further information can e-mail: taxcampaign@winterrule.co.uk.

Campaign Launched to fight Rural Tax Bombshell

2009-04-29T00:00:00+1:00

A campaign has been launched to fight proposed tax changes that could impact on thousands of rural business across the Westcountry.
Hidden in the small print of last week’s Budget were plans to change the tax regime for people who let property as holiday accommodation.
The Government, in an effort to bring the UK in line with EU law, is planning to scrap various tax reliefs available on furnished holiday lets.
Cornwall-based accountants and tourism specialists Winter Rule say the changes could have far-reaching implications for the rural economy by severely reducing the stock of quality holiday accommodation in the Westcountry.
The firm is now gathering evidence to present to Treasury Ministers before the new Finance Bill - which is published on Thursday (April 30) - is given Royal Assent in June.
The South West has around 40% of the UK’s self catering sector, and 20% of visitors to the region come on self-catering holidays.
The campaign is being led by Winter Rule tax partner John Endacott, a national expert on entrepreneurial tax issues who makes regular representations to the Treasury and HM Revenue & Customs on tax policy.
He said: “The Government is content to suggest that this is all about second homes but the impact could be felt by real businesses such as hotels with self-catering accommodation, backpacker lodges, holiday parks, static caravan sites and purpose-built holiday complexes with shared facilities like swimming pools.
“It seems that Ministers simply haven’t thought this through and what we will be arguing – with the support of the industry – is that there needs to be a clear definition of what constitutes a trading business in this sector. Instead the Government is suggesting it will treat them as something different, thereby losing them the tax advantages they are entitled to.
“There is a big risk that the proposed changes will cause the stock of high quality holiday accommodation in the Westcountry to reduce, which will have a damaging impact on our economy at this difficult time. Perversely, this change could even lead to an increase in second homes if holiday accommodation is sold off.”
Mr Endacott is planning to host a around-table discussion with industry leaders to gather evidence on the potential impact of the changes for his Treasury submission, and is already in contact with colleagues in holiday regions across the UK including Scotland, Yorkshire, Norfolk and Dorset.
The current rules include tax relief for expenditure on furniture and equipment in rental premises and relief for current year losses. The Government is planning to abolish the rules from April next year, although the full details have not yet been published.
Among those potentially affected are Robin and Alex Taylor who are investing in the conversion of some redundant buildings at Stithians in Cornwall to create high quality letting accommodation.
Robin said: “The Government is moving the goalposts. We are seeking to develop our site to provide high quality letting accommodation to attract people to stay regularly, and that will benefit local shops and other businesses. It seems that a policy intended to attack second home owners taking advantage of tax breaks will have the undesired impact of hitting not just hard working families like ours, but local communities as a whole.”
Tracey and Jeremy Griffiths run Lusty Glaze Adventure Centre in Newquay, and have furnished rental property on the site that currently qualifies as a trading activity.
Tracey said: “Small business always seem to lose out in these kind of changes. Larger businesses have the ability to absorb changes such as these but for us it has a fundamental impact on what we are trying to achieve, which is a successful business employing local people and trades people.”
The campaign is already attracting widespread support in the Westcountry.
Malcolm Bell, chief executive of South West Tourism, said: “Our region has around 40% of the country’s self catering sector and it’s a massive contributor to the rural economy. But there seems to be a view in Whitehall that this is not a real industry with people running real businesses, and that’s a total misunderstanding of the whole sector.
“This is a classic case of the law of unintended consequences and what Ministers have to understand is that these properties can have 35 to 40 families going through them a year, supporting local shops, pubs and restaurants, and aren’t just let out for a handful of weeks. Looking ahead in a difficult market, the self-catering sector is likely to become even more important and is a very good quality offer, so we do not want to see punitive tax changes that stifle investment.”
Simon Tregoning, Managing Director of specialist lettings agency Classic Cottages, marketing more than 700 self-catering properties across the South West, said: “Holiday cottage letting is the fastest growing sector in UK tourism and scrapping the tax incentives for holiday home owners makes little sense. These changes would hit normal people, from farmers who have converted barns to former coast guards who rely on the holiday letting business as a valuable source of income, not hedge-fund managers who rent out cottages for incidental earnings.
“These are not tax perks, they are just the tax advantages offered to anyone who runs a business. It is wrong to say holiday letting is not a business. Our owners host an average of 100 people a year in their properties and you would not do that unless you were running a business.
“Without these incentives, some property owners are likely to decide against letting out their property and keep it for themselves. As a result holiday homes, which are on average visited by some 25 families each year who all spend money in the local economy, will soon become second homes visited by the same individual owners just three or four weeks a year.”
Richard Baker, head of the rural services team at Stephens Scown solicitors, is also backing the campaign. He said: “These tax reliefs have helped power the rural economy in the South West in recent years and we have a lot of rural clients who have diversified into the lettings sector who would not have done so without these incentives. If the Government does scrap these reliefs then it threatens to stifle one of the fastest growing parts of the rural economy at a time when the region will need to capitalise on the likely influx of visitors who are holidaying closer to home because of the recession. If they don’t have a good experience and enjoy a high quality product, there’s little hope of attracting them in future years. That’s why this move is so short-sighted.”
Tim Jones, chairman of the Devon and Cornwall Business Council, said: “These changes are going to hit businesses big and small at a time when the tourism industry has a vital role to play in helping the region out of recession. The tax reliefs available help make this sector investable, and that creates quality accommodation which pulls in more people to spend their money in the local economy. Now the Government wants to snatch those benefits away at a time when they’ve never been needed more.”
Winter Rule is gathering evidence about the potential impact of the proposed tax changes in order to prepare a briefing paper for Treasury officials and Ministers. If you think your business will be affected or would like to add your voice to the campaign please contact John Endacott at Winter Rule by emailing taxcampaign@winterrule.co.uk

What is our rural tax campaign?

T+1:00

On 22 April 2009 the then labour government announced its intention to abolish the specialist tax rules for those businesses undertaking furnished holiday letting. These special tax rules gave more favourable tax treatment to businesses engaged in the provision of self catering accommodation for holiday makers.

This webpage contains relevant documents and articles relating to developments over the period since 22 April 2009 but in addition we provide email updates to interested parties and if you would like to receive such information then please email us at taxcampaign@winterrule.co.uk.

This tax campaign has been very important to Francis Clark with Winter Rule, not only because of its impact on the south west economy but also as we have specialist knowledge of the hospitality sector and have considerable tax expertise. Follow these links for further details of the hospitality team and the tax team at Winter Rule.

Audio - John Endacott provides an update on the FHL Rule changes

Finance Act 2011 Analysis - FHL's

John Endacott talks to Financial Times

Last chance to comment on new holiday let rules

Finance Bill 2011 - Latest consultation document

Deadline looms for holiday let consultation

Deadline looms for holiday let consultation

New Consultation Document

Western Morning News Article

We're not out of the woods yet on holiday let tax changes

John Endacott from Truro accountants Winter Rule looks at reform of holiday let tax rules.

Budget Announcement - Furnished Holiday Lettings

Furnished Holiday Lettings Budget Announcement

A Hospital Case - Taxation Article

A Hospital Case

The Rotunda Hospital Case

Salisbury House

A More Recent Case

Back to Furnished Holiday Lets

The above article was published in Taxation on 10 June 2010

Taxline Article

Furnished holiday lets - where are we after the PBR?

Western Morning News Opinion Article

Pre Budget Report Impact Assessment

Pre Budget Report Technical Note

Holiday Let Changes threaten Investment, says Industry Survey

Holiday Let Campaign hits the Road

Taxation Magazine Article by John Endacott

Campaign Launched to fight Rural Tax Bombshell

What is our rural tax campaign?

Furnished Holiday Lettings
Budget Announcement