My client lives abroad and has been letting his UK property furnished for many years. The incoming tenant wanted to let unfurnished rather than furnished. Client is now incurring storage charges. Any views on whether storage costs are deducible against income from the unfurnished let? Initially I thought 'no'. However, GAAP applies and another tenant may want to have a furnished property, in which case the furniture would be put back, so I'm inclined to claim relief. Costs of storage of tools of trade in other businesses would be an allowable expense.
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To be honest, I really don't know the answer to this one.
However, logic dictates that the costs are not directly attributable to the lettings being declared and so may not be allowable.
The comment regarding storage of tools of 'trade' makes me think that, as lettings in this context are NOT a trade, then this principle may not apply. It might if the lettings were furnished holiday lettings but the clue there is in the word 'furnished'.
It would be nice to know the answer to this one.
What is being done
At present there is no furnished letting, only an unfurnished letting. Storage of furniture cannot be a cost of an unfurnished letting as the furniture is, by definition, not being used for that letting. To anticipate a future letting that is furnished would be equivalent to anticipating a future gain, which would be contrary to GAAP.
By contrast, tools of an ongoing trade are being used in that ongoing trade. There is no anticipation of gain because the trade is ongoing whereas your furnished letting has ceased without guarantee of restarting. An ongoing trade has a rational expectation of continuing work, whereas you don't know if furnished letting will ever happen again.