Personal Solicitors Ipwich – Holiday home in Suffolk is refused business property relief

James Skellorn

CRC v Lockyer and Robertson (Personal Representatives of N Pawson Deceased) (2013) UK UT050 (TCC)

‘The interesting case of Pawson  has taken another twist. The Executors of the late Nicolette Pawson claimed business property relief (BPR) on her 25% share of a holiday home, that she part-owned near Aldeburgh in Suffolk, which was rented  as a furnished holiday let (FHL). Effectively, this claim for BPR  would make the property exempt for inheritance tax purposes. The Court initially found in favour of the Executors, confirming the holiday let was indeed a business and HMRC appealed the decision on the basis that the property was an investment, rather than a business and accordingly subject to inheritance tax.

The Upper Tribunal has now found in favour of HMRC, stating that in essence the FHL did not fall on the right  side of the trade marker for BPR  to apply and was effectively an investment property, which should not attract BPR. One of the areas of contention was the services provided to guests by the Pawson family. If you own a FHL, it may be worth reviewing  and increasing the services you provide to guests such as providing meals, laundry services and being on call 24/7 for queries. This may strengthen your case for claiming BPR, although this is no guarantee. The case is due to go to the Court of Appeal – watch this space!’

James Skellorn is a personal solicitor at Barker Gotelee, solicitors in Ipswich

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