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FHL Vs B and B

And so it begins

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Hi All

In the past we agreed with a client that the income from a property which simply rented out furnished rooms with no services over an above changeover would be classed as FHL's for the purposes of declaring the income on the tax return. The rooms are advertised on the like of booking.com / expedia etc. 

Now of course, from the perspective of SEISS, this is not ideal as they are unable to claim the grant as this is not self-employment income. At the time they were more than happy avoiding class 4 NI however!

Client now contests the original classification as FHL. My questions are:

  • Can anyone point me in the direction of a resource to help assess the classification (FHL v Hotel / Band B v investment)
  • In hindsight, I wonder if the limited service element would even reach the threshold of a FHL and not simple be assessed as investment income?
  • Would there be any mileage in trying to reclassify the income with HMRC? I am highly doubtful and regardless would not be happy changing the facts to suit the current situation 

If it makes any difference the building was operated as a B and B previously but of course provided the usual services associated with a B and B

Many thanks

Replies (7)

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By Paul Crowley
15th Apr 2021 09:48

No action now is likely to bring back entitlement to SEISS
The self employed income needed to exist in ye 2019 or 2020

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By Wanderer
15th Apr 2021 09:53

Something else to throw into the mix.
Did they get the £10,000 council grant that many FHLs did?

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By Crouchy
15th Apr 2021 09:53

you dont say where the property is - is it a stand alone property or part of the owners property

to be a B & B, there needs to be more on offer - there will usually be a certain level of hospitality and of course breakfast! sounds like both are missing

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By Tax Dragon
15th Apr 2021 10:00

Agree Paul.

FWIW, B&B involves providing beds and serving breakfasts, FHLs means the letting of furnished holiday accommodation meeting certain criteria e.g. regarding availability and use, investment might include the letting of furnished holiday accommodation not meeting the criteria and I'll let you look up (or search for) what hotels are - you should do some of the work yourself.

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By lesley.barnes
15th Apr 2021 10:08

You could also look at whether the property is registered with the local council as a hotel? You would need to do some research as to what the local council require but I would imagine they would require notifying, council tax/business rates, fire safety, H&S checks? Your client can't have it all ways they are either booking.com or a hotel. Does this help - CA32402 - IBA: Qualifying hotels: Meaning of hotel

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca324...(3)%20Hotel%20Proprietors%20Act%201956%20defines%20a%20hotel,sum%20for%20the%20services%20and

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By Wanderer
15th Apr 2021 10:09

Marmite wrote:

Can anyone point me in the direction of a resource to help assess the classification (FHL v Hotel / Band B v investment)In hindsight, I wonder if the limited service element would even reach the threshold of a FHL and not simple be assessed as investment income?

PIM4300
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By Duggimon
15th Apr 2021 10:52

Sounds like they're a B short of B&B

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