Holiday lets are investment

The taxpayer ran a holiday letting business. She moved 85% in two tranches to a settlement and claimed the transfers qualified for 100% business property relief under IHTA 1984 s 103 et seq.

HMRC said the transfers were not qualifying because the business consisted mainly of making or holding investments. The taxpayer appealed.

The First-tier Tribunal referred to cases including CRC v Pawson’s personal representatives [2013] STC 976 to conclude that elements of the taxpayer’s business such as marketing and repairs and maintenance were investment activities; non-investment ones including cleaning and the provision of linen were “relatively minor and ancillary to the provision of the accommodation”.

The taxpayer said some units were let on an assured short-hold tenancy basis. She claimed the difference in rent between a holiday let and an assured short-hold tenancy represented the value of the services provided under the former...