Just looking for some advice on Furnished Holiday Lets. It seems to be all I deal with at the moment!
Client is building up a few FHLs. The first has been let during the 18-19 year and meets all conditions etc so all good there. The second is a newly converted barn which has not been let during the year so does not yet meet FHL conditions but has obviously incurred many costs. My first thought is that the business began when the first property was let and so these costs (many of which will be capital allowances) should be included in the year they occurred.
I'd be grateful to hear if anyone thinks differently
Thanks in advance
Valerie
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
No, the barn has not been let during the year in question so doesn't qualify as an FHL but my thoughts are that it will form part of the same business which began when the first property was let. Putting the costs through would just increase the loss to carry forward so in fact the same result as leaving it till next year. My thinking (not sure if correct) is that if I left it till next year and put them through as pre trading expenses they wouldn't in fact be pre trading as the business was already running.
Not sure if I'm overthinking this LOL
Valerie
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Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Oh, I was wonering if you might get away with an election/grace.
So it sounds like you cannot treat it as a FHL at all this year, so usual property rules apply with the usual tax restrictions at a wild guess without more info. Issue then is you no longer get the special FHL treatment, offsetting losses is an issue and other taxes may be affected - CGT IT etc. I take it they didnt take advice before they started down this road. Tax - all in the 'planning' malarky.
If I were you I(sub it, or client) would pay for some specialist tax advice on this one, given future impact as well as now.
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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
I would tend to agree, I always thought that you could only claim CA in the year that the property is let as a FHL and meets the qualifying conditions, unless as Joanne says a period of grace is elected which it can not be in this case as the property was not let in the previous year.
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Could've possibly done it as an election if they had taken some advice and got their act together before starting it, but hey that's clients.....always tell you afterwards instead of beforehand, so it's their issue when they lose out, except they will try to push the blame elsewhere.
Might be vat issues as well.
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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
It's a bit of a minefield isn't it. I agree, I think some specialist advice required here.
Have a great day
Valerie
__________________
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
