FHL Caravan - Capital Allowance available or not

FHL Caravan - Capital Allowance available or not

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Hi,

I'm looking for some help with a caravan which qualifies for FHL tax treatment.

I'm finding the info on whether capital allowances are actually available on the caravan a bit conflicting.  HMRC site has several references to CA being available on caravans but not specifically in relation to FHL's.  However when looking at the FHL section of the HMRC PIM where it lists some of the differences in the treatment of FHL's it states:

“Entitlement to plant and machinery capital allowances on furniture, furnishings, etc. in the let property, as well as on plant and machinery used outside the property (such as vans and tools); but there are no capital allowances for the cost of the property itself or the land on which it stands;”

I spoke to HMRC to check the situation and they said that this is the overriding rule and therefore there are no capital allowances available for the cost of the property itself even if it is a caravan.

Having said that, another tax advisor has pointed me towards the Tolleys Tax Guide for 2010-11 where paragraph 32.28 states:

“The letting of holiday caravans is, depending on the scale, either treated as a trade or as a furnished letting.  In the latter case, the income may be treated as trading income from furnished holiday accommodation if the conditions are satisfied.  Long-term lets would accordingly not qualify.  Caravans occupying holiday sites are treated as plant and machinery qualifying for capital allowances, even if they are on hard standings and not required to be moved.”

Now I would really like to be able to put my full trust in what HMRC told me on the phone, but I just don't have enought faith in them to believe that they are always right and I don't want to do my client out of what could be a very beneficial allowance for him if he is genuinely entitled to it.

Any suggestions, opinions or experience would be very welcome.

Thanks

BG

Replies (4)

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Teignmouth
By Paul Scholes
04th Oct 2011 15:13

Is it on a licenced site?

Hi - I looked at this for our van a few years ago (but we love staying there so much we'll never reach the FHL weeks let rule!).

This has always been a tricky subject and my text says:

Caravans are referred to at CAA 2001, s. 23, list C, item 19, which provides that a caravan provided mainly for holiday lettings is not to be prevented, on the grounds that it is a building, etc. from qualifying as plant.

Have a look at the CA manual: http://www.hmrc.gov.uk/manuals/camanual/CA22100.htm 

I think capital allowances on a holiday let van are OK but as long as it's on a licenced site.

Thanks (1)
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By Batty Girl
06th Oct 2011 12:09

Update

Thanks for your help on this Paul.

As an update, after receiving conflicting information from various sources I phoned HMRC again to ask a slightly different question along the same lines.  This time the technical advisor put me through to an inspector who coincidently had recently looked into this.  In short, she has had it confirmed that capital allowances are available on caravans as long as they meet the criteria in CA22100 (as per Paul's comment) and that this applies whether the income is treated as normal property income or FHL income.

Now for a new question - if the property qualifies as a FHL now but fails to qualify in 2012 when the availability etc rules change then there will be a balancing charge as there is a deemed sale/acquisition.  We can then claim CA's again under property income rules.  But presumably the two cannot be offset against each other (as I understand property income and FHL's are treated as seperate businesses) so the client will get a big tax charge in that year as the balancing charge will be quite large if we have taken the full AIA on the caravan.  What's more, presumably it will be deemed to have been purchased from a related party so no AIA will be available in the year it becomes property income (rather than FHL).

I'm thinking this is a serious minefield and I'm going to have to be very careful to avoid my client ending up with a big bill in a couple of years!

Any help appreciated (again!).

 

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By ballgood
21st Jun 2012 18:16

FHL how do I confirm CA on the caravan purchase is allowed ?

 

 I own a holiday cottage which I have let as a FHL for many years, last tax year 2011/12 I bought a caravan to let for 5K and am letting it as a holiday letting  FHL this 2012/3 tax year on a registered caravan site. I am aware of your discussions as whether the capital allowance is available on the purchase of the caravan.

So I am looking for written tax advice from someone with profession indemnity insurance ( I guess all accountant have this), which states that capital allowance is available for the caravan in this situation. I am of course willing to pay for the advice (let me know how much first); I really just want to cover myself with the hmrc.

I am really trying to confirm that CA on a FHL caravan is allowed. If you think I am going about this the wrong way then let me know. .

 

Thanks Bridget

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By les70
06th Aug 2014 12:01

caravan on holiday park

I am not sure if this qualifies for A.I.A so I put a call into HMRC the advice I have been given today is that its classed as premises not plant and therefore does not qualify. This does not seem fair that its a wasting asset unlike a building which will generally appreciate. Any help anyone I am unsure what to do now as ive beengiven advice by hmrc

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