Latest case brings some relief for holiday cottage businesses

11 Jul 2018

country house with gate

The latest case, Executors of Joyce Graham (deceased) v HMRC will bring relief to those farms and estates that let holiday accommodation with the expectation that Business Property Relief against inheritance tax will be forthcoming.
HMRC has, over recent years, been successful in challenges to such an approach, as in the cases of Ross (2017) and Pawson (2013).

The latest Graham case, however, has changed that with the Tribunal persuaded that the level of services provided in addition to the accommodation were sufficiently extensive that the business evidently was not for investment purposes, saying that “the pool, sauna, bikes and, in particular, the personal care lavished upon the guests by Louise Graham” were evidence of much more than the letting of a second home.

Jamie Younger, Head of the Landed Estates Group at Saffery Champness, says:

“This would appear to be a breakthrough in the run of cases which on this particular issue have not been resolved in favour of the taxpayer – to the point that many were in fact wondering whether interpretation of the rules had effectively changed for good. That, given this latest case, is clearly not the situation, and that whilst highly subjective in judgment, it is the type, quality and extent of services provided over and above the accommodation itself that will clinch the argument.”