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Holiday Accommodation being let for Free to NHS

Where do I stand re: 31-day rule for continuous occupation?

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Recently advertised my holiday accommodation to be available for Free for Key Workers and the offer was taken within a day. Donna (name changed), a clinician in the NHS, moved in Monday 30th March. It only occured to me yesterday to question whether the 31-day continuous letting rule would apply if Donna stayed for more than 31 days given that I think her requirement may extend this due to the ongoing Covid-19 challenges? Morally I don't think HMRC would have a leg to stand on if she did but unfortunatley HMRC don't make rules based on morality so I'd like any advice on where you think it would stand legally / within the FHL rules?

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By whitevanman
02nd Apr 2020 11:22

What do you think the 31 day rule is?

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By Abacus1812
02nd Apr 2020 11:40

To continue being classified as a furnished holiday let all year round, one must not let the property out for longer than 31 days to one individual or group i.e. would have significant tax disadvantages if this rule was not adhered to.

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Replying to Abacus1812:
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By whitevanman
02nd Apr 2020 11:53

That is not exactly how the test applies. Also, there is a reference to exceptional circumstances (or some such) that may come into play.
Suggest you read the HMRC guidance around PIM4110.

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By Abacus1812
02nd Apr 2020 12:09

whitevanman - Thank you.
I suppose the 'exceeding of the 31 days' could be justified due to 'unforeseen circumstances'. Perfect :-)

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Replying to Abacus1812:
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By whitevanman
02nd Apr 2020 12:57

If you read s325, there are 4 period lengths referred to, 210 and 105 days and 155 and 31 days.
It is hardly surprising that the first and third period limits together total 365 days.
The 155 days refers to longer term letting. So, you could let the property for periods over 31 days as long as they don't total more than 155 days in the relevant period. These longer term periods do not count as "allowable" (for want of a better term). But there is the "exceptional circumstance" get-out that could cause one or more such period to be"allowable".
There would remain 210 days and if the property was let as FHL for 105 days in that period, it would still qualify.

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By Duggimon
02nd Apr 2020 12:18

Whether this occupation would or would not fall foul of the legislation as it is, I would have no hesitation in disregarding the continuous occupation or any other way in which this impacted your furnished holiday let status, filing the tax return as normal with a note in the whitespace, and arguing with HMRC should they say otherwise.

These are extraordinary times ©lionofludesch

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By pauljohnston
08th Apr 2020 09:41

I suspect we will all be asking questions about the legislation and exceptional circustances not only FHL.

Reading this question I did wonder if it is a let if no rent paid or just a period.

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Replying to pauljohnston:
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By Abacus1812
08th Apr 2020 10:40

To be fair, in order for a 'belt and braces' approach and to also cover me for the Insurance cover whilst people are staying I have asked the occupant to sign the booking conditions and charged a nominal rent for the period of £1 (which I may have accidently dropped on the ground).

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By Chris Floyd
08th Apr 2020 10:06

Unless the rules are relaxed, I think you could fail on the 'let commercially' condition. HMRC helpsheet HS253 explains further: https://www.gov.uk/government/publications/furnished-holiday-lettings-hs...

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Replying to Chris Floyd:
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By Abacus1812
08th Apr 2020 10:42

It has been let commercially always and I have various forward bookings all the way through to June 2021 so I think I'm covered on this point. Good question though.

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By Philipbwood
08th Apr 2020 10:19

I guess the problem for all owners of furnished holiday lettings will be the 105 day rule, given that nobody can travel either within, or without, the country. I know of countless future bookings for FHLs that have been cancelled already, and if it is primarily a summer season let, there will be no chance of achieving 105 days this year

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Replying to Philipbwood:
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By Abacus1812
08th Apr 2020 10:49

Yes, the 105 day rule may come into play but I would expect an element of 'pro-rating' would be allowable; the value of which would be based on the government restrictions to travel period. Would seem fair to me. Luckily it is not just a summer season let and total forward bookings from September 2020, within the accounting period (April - March), are already at 50% of that so hopeful this shouldn't apply. Moreover, would be covered under the 'Period of Grace' election election.

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