Chapter PIM7210
| Published date | 10 April 2016 |
| Record Number | PIM7210 |
| Court | HM Revenue & Customs |
| Issuer | HM Revenue & Customs |
ICTA88/S504
Qualifying Tests for CT taxpayers up to 2010-11
Summary
To qualify as a FHL a property must:
- let on a commercial basis with a view to realisation of profits
- be furnished - there must be sufficient furniture provided for normal occupation and the visitors must be entitled to use the furniture
- pass the 3 occupancy conditions
Occupancy conditions
Accommodation can only qualify as a FHL if it passes all 3 occupancy conditions:
- Pattern of occupation condition
- Availability condition
- Letting condition
The pattern of occupation condition
For at least seven months the property must not normally be in the same occupation for more than 31 days
A property that is let on a long-term basis cannot be regarded as available for holiday lettings. A property that is owner-occupied for part of the year cannot be regarded as available for letting while it is owner-occupied. Nevertheless, the words ‘in the same occupation’ above should be interpreted as ‘let in the same occupation’ and do not preclude relief to an owner who moves out of his home during the holiday season and returns to live there when the season is over.
The availability condition
The accommodation must be available for commercial letting to the public generally as holiday accommodation for not less than 140 days.
The letting condition
The periods for which it is so let must amount (in the aggregate) to at least 70 days.
The taxpayer may have more than one unit of accommodation let for holiday purposes. If so, it isn’t necessary for each unit to have actually been let for at least 70 days to meet the 70 day rule provided each unit satisfies the 140 day and 7 month rules. The taxpayer may claim averaging treatment in order to satisfy the ‘actual lettings’ test
Period to which the occupancy conditions are applied
For a continuing let, the 12 months ending with the last day of the accounting period,
At commencement, 12 months beginning with the date in the accounting period on which it was first let,
On cessation, 12 months ending with the date in the accounting period on which it ceased to be let.
Examples
1) A property has been let furnished on a commercial basis since 2006. For AP ending 31 December 2008 tests are applied for period from 1 January 2008 to 31 December 2008
2) A property is acquired on 1 January 2009 and is let furnished on a commercial basis from 1 March 2009. To determine whether the letting qualifies for the AP ending 31 May 2009 the tests are applied to the twelve...
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