The First-tier Tribunal (FTT) has found that a letting business providing an exceptional level of service and amenities to guests could be regarded as a non-investment business and therefore qualify for business property relief (BPR). What are the details?
Case facts
In Graham (Deceased) v HMRC, the FTT considered whether a letting business could be considered a non-investment business in order to qualify for BPR. The appellants argued that the level of service provided to guests was more akin to a hotel than a simple letting arrangement. HMRC argued that the business consisted mainly in the holding of an investment.
The FTT categorised taking payments from guests in exchange for accommodation, advertising, taking bookings and repairing and maintaining the buildings as investment activities. However, providing home-made and purchased food and drink, household goods, bicycles, games, assistance and advice were all non-investment activities. The provision of linen and towels, bed and breakfast accommodation for guests’ extended families, providing barbeques, cream teas, and helping to organise guests’ events were also non-investment activities. The provision of a pool, sauna, and gardens represented a mix of investment and non-investment activity.
Decision
The FTT decided that only a letting business providing an exceptional level of services and amenities to guests could be regarded as predominantly a non-investment business. In this particular case, the business was found to be a non-investment business and so qualified for BPR. The appeal was allowed.
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