Hi all, I picked up a potential new client on Friday night, whom has a self contained (converted Barn) building on her land, and has decided, now she has children, it will be a valuable way to boost their income, to let it out as a holiday home.
I explained a little about how I operate, and what she needs to do to get started etc... Her electricity / water bills all run on the same account as her house - but a percentage of the bills could be used as costs for the Holiday Home.
I am yet to meet up and discuss, but I just wanted to try and do a little home work beforehand.
I presume I would have to only put water and electricity costs through at times when the Holiday Home was actually inhabited by someone other than her? (She did say they might personally use the home on occasions) or would a flat percentage be ok?
Just a thought - how can this be apportioned so that HMRC would be happy in the event of an inspection. A flat rate doesnt cut it Im afraid. But also - how can you do a percentage? Devils advocate. Utility providers are not going to be happy that their supplies are being provided at the private/domestic rate and then used for a business. The supply should be formally split.
Also - why would she want to use the property personally when she has an abode on the same site?
Care on looking info up on google - the property to let/holiday rental market has seen some considerable changes recently. You need to consider (as ever) HMRC guidance, legislation and absolutely get to understand the clients specific plans on the letting/marketing/use of agents (and all the VAT implications if VAT reg)/what specifically can be deducted as allowable expenses (as I say lots of changes in this sector) and how you will deal with your client when you have to say no (they will try to tell you something is allowable when its not - so make sure you are up to speed with the new rules so you can argue your corner). Also can it even be classified as a holiday let in line with the regulations?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Food for thought. I need to do my homework. From our conversation I think they were using it on and off personally when family came to stay. I imagine the thought of claiming things back and setting it up as a business is very tempting. It was a phone call out of my working hours, whilst preparing dinner. We are yet to meet, so will be able to find a lot more out then.
