Thanks SparkJS.sparkJS wrote:Well firstly the interpretation of the legislation is subjective so I think we need a tax case to refer to, to get to the bottom of it but...
We are relying on the property being non-residential i.e. not a residence. Forget the word commercial - its not relevant. A residence is by defined by the legislation as a building that is used as a dwelling. A dwelling is where people live (also the dictionary definition of a residence).
I asked my solicitor during the completion process whether they could arrange it so that I can 'live' there as my residence and the answer was no. It is not allowed and also not suitable to live there as a dwelling (due to design). It is only suitable for people to 'stay' there for a short stay i.e. holiday. Each property is unique but I'm sure a huge proportion of holiday homes are suitable to be lived in and will be classed as a dwelling. I have a dozen reasons why my property could not be lived in as a dwelling.
In the legislation, one of the exclusions as a residence is a hotel or similar establishment. There is mentioned somewhere in hmrc guidance that cases will be treated on their merits.
http://www.legislation.gov.uk/ukpga/2003/14/section/116
My solicitor went away to do some research and concluded that this was a trade (I bought through a Ltd Co - not sure if that makes any difference though!) and the purchase included Goodwill and other business intangible assets...
""it appears that the property may possibly be treated as a trade for all purposes if the following conditions are satisfied:-
1. The property is situated in the UK;
2. The business is carried on commercially and with a view to a profit;
3. The total periods of “longer term occupation” of the property do not exceed 155 days during the relevant accounting period. Please note that a period of “longer term occupation” is a letting to the same person for longer than 31 continuous days;
4. The property is available for commercial letting as holiday accommodation to the public for at least 210 days during the relevant accounting period;
5. The property is commercially let as holiday accommodation to members of the public for at least 105 days during the relevant accounting period.
""
I hope all this helps. The tax return is a self assessed tax so ultimately it is up to you to fill them in correctly. Get yourself some PFP insurance just in case!
I agree re. the property being non-residential, however having spent the morning (quite literally) trawling through guidance produced by the Welsh government they include FHLs under their definition of a dwelling for higher rate purposes (LTTA 80/50, if anyone needs it!). Unfortunately it specifically references FHLs and also properties that have occupancy restrictions. I'm not happy.....
Thanks again, off to empty my piggy bank