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Serviced Accommodation and Capital Allowances

Does Serviced Accommodation always attract capital allowances?

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As a capital allowances claims company we undertake a lot of claims on furnished holiday lets (FHLs). For FHLs we know there is a clear critearia for when they qualify, so establishing an entitlement to claim is made a lot easier. However, in recent years, a lot of investors are approaching us to claim on what they refer to as Serviced Accomodation. However we have been reluctant to consider undertaking capital allowances claims on such properties unless, as a minimum, they meet the same critearia as furnished holiday lets i.e. predominently short term lets over 105 days per annum and available for 210 days per annum.

I get the feeling that there may be other capital allowances claims companies who are not taking such as cautious approach but I cannot see how Serviced Accomodation can be separated from the same criteria as for FHLs as the service being provided is broadly similar. My question is do you think we are missing something in our thinking or would you agree with our approach?   

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By Max Maxwell
20th May 2022 16:10

Interesting question..Following

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By David Ex
20th May 2022 17:50

plummy1 wrote:

... I cannot see how Serviced Accomodation can be separated from the same criteria as for FHLs as the service being provided is broadly similar. 

On the face of it, a reasonable conclusion. The $64,000 question is what is meant by "holiday accommodation". I'm not sure the intended meaning and significance of the word "holiday" is explained. Looked at superficially, it seems to be some kind of shorthand for "very short term".

What qualifies a hotel as a hotel and not a FHL??

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Replying to David Ex:
By plummy1
20th May 2022 18:32

FHLs are generally self catering while with hotels and guest houses there is generally some centralised service such as food and / or a bar. Furnished holiday lets are not required to be in a recognised holiday destination either provided they meet the qualifying criteria so there again I can't see a distinction to be drawn between an FHL and Serviced Accommodation.

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Replying to plummy1:
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By Hugo Fair
20th May 2022 20:39

Although not really my area, I'd start from the other end ... as hinted at in your main post when you say "what they refer to as Serviced Accommodation".

There's no shortage of guidance and indeed legislation specifically mentioning and defining FHLs ... but I can't find any equivalent on Serviced Accommodation.

It's a phrase that seems to be flavour of the month in the YouTube fraternity (especially amongst the advisors who promote schemes) - but none that I've found try to state what it is, as opposed to how much money you can save.

At the risk of showing my age, the phrase Serviced Accommodation brings to mind long-lease flats in mansion blocks with central services provided to the asset-rich but energy-poor inhabitants (such as Dolphin Square in Westminster).
But surely there's a proper definition somewhere - even before considering CAs?

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Replying to Hugo Fair:
By plummy1
20th May 2022 20:52

Thanks Hugo. I think you have hit the nail on the head. I don't think there is a definition for Serviced Accommodation as far as the Capital Allowances Act is concerned. This is part of the reason why I am being very cautious around this whole area.

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Replying to Hugo Fair:
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By David Ex
20th May 2022 22:36

Hugo Fair wrote:

But surely there's a proper definition somewhere - even before considering CAs?

No idea; not that I’m aware of although I’ve not searched.

I was trying to understand the distinction between serviced accommodation and a hotel. And it was interesting that the legislation for furnished holiday letting doesn’t involve any definition of the “holiday” part.

Presumably, if it’s not a hotel it’s a FHL or a “premium” (with ‘service’ element) residential let. Are there any other options?

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Replying to David Ex:
By plummy1
27th May 2022 21:50

Hi Hugo,

Funnily enough I have just watched a video from another capital allowances specialist saying there is no definition of serviced accommodation for capital allowances purposes. They drew the same conclusion that the governing legislation has to be that which governs furnished holiday let's. On this basis I feel our approach is the right one.

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