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How do you calculate let days for FHL's?

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I've never really had much to do with Furnished Holiday Lets (FHL'S), but as the allowable element of mortgage interest is reduced on buy to let properties I suspect I will see a few more.

A client has just told me they have invested in a FHL and are now concerned about the letting condition. The condition per the ITTOIA is "...the accommodation is commercially let as holiday accommodation to members of the public for at least 105 days."

In the first 12 months they are currently expecting short commercial lets to come to 82 nights, somewhat short of the 105 days. However, depending on your interepretation of the word day, they could be considerably closer to the 105 day requirement.

So the question is, what is a day? I can't see that the legislation has defined this and I can't find reference to this any where else. So is it:

  1. day = nights let;
  2. day = 24 hours;
  3. day = any day which has been partly let (ie a 2 night stay = 3 days);
  4. day = something else.

 My thinking is that:

  • No. 1 can't be right otherwise it would specify nights, however holiday accomodation is normally sold by the number of nights so maybe that's what was intended
  • No. 2 would be too onerous to calculate, so unlikely the correct answer
  • No. 3 sounds plausible but HMRC would probably prefer option 1

Any experience you can share or relevant case law you are aware of would be greatly appreciated.

Many thanks

Replies (9)

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By Accountant A
17th Sep 2018 13:54

No idea but I'd guess 1.

Intrigued to know how you can get from 82 nights "considerably closer to the 105 day" by flexing the definition.

How is the property marketed? Is it on the basis of "per night", per hour?

EDIT: For the avoidance of doubt, I am sure you can't double count. If one visitor leaves in the morning and another arrives in the afternoon, that isn't 2 days, I would say.

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Replying to Accountant A:
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By Burbage Accounting
17th Sep 2018 14:02

Thanks for the response, I agree that double counting is definitely wrong.

I have very little info on how the property is marketed, at a guess I would suggest it will be marketed as mid week and long weekend stays.

On the assumption that lettings aren't consecutive i.e. same day change overs and the average stay is say 4 nights then option 3 would add about 20 days to the total and all of a sudden it's very close to the 105 days.

The assumptions may not be accurate but even adding 10 days could have a big impact if total nights are getting close to the 105 threshold.

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By lesley.barnes
17th Sep 2018 13:54

Another vote for number 1. My logic for 1 is as you say someone staying in a holiday let normally pays per night. If you go for option three the customer is paying for 2 nights not 3 so you would inflate the occupancy.

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By Portia Nina Levin
17th Sep 2018 14:10

This has come up before, and I think the legislation answers your question.

The answer isn't 1, 2, or 3,per se, but something more intelligent than that (to which 3 is the most proximate).

The legislation poses the test, "on how many days in the relevant period (usually a tax year) was the property let". And the property is let on any day if it was the subject of one or more tenancies on that day (it will be subject to more than one tenancy on a day, where the tenant changes and the old tenancy terminates on that day, and the new lease commences on that day.

The point being that in your 7-day let example, if the tenancy was immediately followed by another 7-day let, you only count the change over day once. So if there were no lettings either side of the two 7-day lets, you have lettings covering a period of 15 days.

If you try and count it letting by letting though, you will come up with the wrong answer.

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Replying to Portia Nina Levin:
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By andy.partridge
17th Sep 2018 14:17

This is the perfect answer. End of.

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Replying to Portia Nina Levin:
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By Burbage Accounting
17th Sep 2018 14:31

Many thanks for this, I was heading in this direction but you have helped me get there a lot quicker and the explanation is excellent.

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By Peter Cane
17th Sep 2018 14:39

If it's any help, I raised a question on this a few years ago here https://www.accountingweb.co.uk/any-answers/furnished-holiday-let-days It may not answer your question exactly, but might help.

And no, I can't tell you what the outcome was as I no longer work at the same firm and the outcome has long since disappeared into the dim recesses of my memory! Sorry

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Replying to Peter Cane:
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By Burbage Accounting
17th Sep 2018 15:13

Many thanks for this it has an uncanny resemblance to my initial thought process.

I don't know why this didn't come up in my original search but it certainly made me feel slightly less daft!

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By elovett
17th Sep 2018 16:38

Hi, I went on a course for FHLs last year, and the outcome was - get the days let to the qualifying amount by hook or by crook, because as you say HMRC are going to be taking a closer look at holiday lets, particularly where people are changing them from BTLs.

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