Cash basis FHL

Furnished Holiday Let & Cash Basis

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We are aware that from 2017/18 the cash basis for a FHL is automatic. However, we have a new client (playing catch up) who first rented a FHL in May 2016 (FHL rules met) and the FHL income for the 2016/17 tax year was approximately £29,000. The question is are we able to adopt the cash basis for 2016/17 as below the vat threshold, or is it strictly the same as residential property income and as such the accruals basis has to be adopted as the income is over £15,000?

On a separate issue if a holiday maker pays say £500 today for a stay September 2020 (with the balance paid July 2020) do we recognise the £500 in the accounts to 5 April 2020, even if in some cases the £500 might be refunded if say the stay happened to have been cancelled in May 2020?

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By whitevanman
18th Dec 2019 19:58

The accruals basis would have to be used for 2016/17 and adjustments made on transition to cash basis for 2017/18.
As to the deposit, I would suggest that, if and so long as it is refundable, it is not the income of your client and should not be accounted for as such. Once the deposit ceases to be refundable, it is your clients and should be brought in.

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