Furnished holiday lets (FHLs)
In HMRC v Lockyer & Robertson (Pawson's Personal Representatives)1, the Upper Tribunal upheld HMRC's view that the letting of a bungalow as holiday accommodation was 'mainly that of holding the property as an investment', and this did not qualify for relief. That decision is considered to be conclusive in relation to the ordinary short-term letting of a property for holiday use, but the expectation was that there would be cases where relief may apply, an example being where the accommodation is on a country estate and some meals are available in the principal residence.
In Green v HMRC2 an attempt was made to distinguish the decision in the Pawson case. It was argued that, because the income produced was much greater than that in that earlier case (there being five let units), it was liable to business rates and services provided were superior. Further, if the units had been let on shorthold tenancies it was estimated that the income return would be well under half that achieved from furnished holiday letting. Nevertheless the Tribunal held that it was essentially a property rental business.
In Executors of Marjorie Ross deceased v HMRC3 a business of eight holiday lettings included the option to take breakfast at a nearby hotel or having bar snacks delivered to the accommodation and there were staff services: a receptionist at the hotel and a handyman living on site. 14% of turnover was paid to the hotel for the