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Capital Allowances Claims - Furnished Holiday Let

Can we make a full claim for capital allowances based on these facts?

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 I would apprciate any advice or opinion on the following.

Our potential client is buying a furnished holiday let but although the property could have qualified as a furnished holiday let in the vendor's hands their accountant (we suspect) has treated it as a "dwelling house" (residential property) for tax purposes.

Under the new capital allowances rules which applied from April 2014 if the previous owner was able to claim capital allowances but has failed to do so the available capital allowances would need to be "pooled" by the vendor and then could be transferred through to the new owner by means of an S198 tax election.

Without being leading we would prefer it if the April 2014 rules are not applied leaving our client to claim capital allowances based on their purchase price. This will produce significantly better results than the alterantive. Therefore do you think we have a sufficiently strong argument to say the property did not qualify for capital allowances purposes in the hands of the vendor becasue they treated it purely as a "dwelling house" and accountant for income and expenses accordingly?

Thanks for any advice. I know I should know the answer but in my head this seems liek a grey area.  

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29th Mar 2017 14:56

In my opinion, after a quick re-skim of the rules, a property is not a FHL unless the election is made, either via a tax return or separately to HMRC. If the property is not a FHL then no capital allowances were available.

I would agree with your assessment that it's a grey area though, I've not got any experience with this specific situation myself.

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By Ruddles
to Duggimon
29th Mar 2017 15:49

What election?

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