31 July 2017
With the school holidays upon us and many people looking forward to a well-deserved week or two off work, a topical First Tier Tax Tribunal (FTT) decision (decision TC 05959, Executors of Marjorie Ross) recently saw the executors of a deceased taxpayer pursue a claim for Business Property Relief (BPR) in respect of a Furnished Holiday Letting (FHL) business. The executors’ arguments centred on the level and type of services provided, including the agreement with a local hotel previously owned by the deceased under which guests of the properties used certain hotel facilities.
HMRC’s stance on this is relatively clear, and is set out in their manuals where they refer to the most contemporary cases, being the Upper Tier Tribunal (UTT) finding in Pawson [2013] UKUT 50 (TCC) and the FTT decision in Green [2015] UKFTT 334 (TC). Both cases were cited in the recent Ross case and the arguments proceeded on similar lines.
Reading the decision, what’s most surprising is that the taxpayers were willing to spend the time and money involved in bringing the case to tribunal at all. There was little in the write up which made the reader feel there were material deviations from the principles set out in earlier cases and the finding that the business was predominantly one deriving its income from the letting of land and buildings seemed the only likely conclusion.
So probably all this case does is serve to encourage HMRC to continue refusing claims to this valuable Inheritance Tax relief on FHLs whilst reminding taxpayers that the bar over which they must propel themselves to secure relief on such businesses is set very high indeed. Businesses of this type need to be verging on the nature of a hotel or B&B before there is a realistic prospect of Inheritance Tax relief becoming available.
If you're thinking of making a similar claim, or have any questions about Inheritance Tax relief, please contact me or your usual UHY adviser.
