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Touring camp site

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A client of mine has a touring camp site, no static caravans just pitches with electric points. He sells gas and has a block with showers/toilets hair dryers which is all an additional charge. I think at one point he may of had a pool table in there somewhere. 

I have always put it on the self employment pages not the on the land and property pages 

Now push has come to shove and he’s selling up and I’m wondering if the revenue will accept it’s a trade and let the entrepreneurs relief go through. 

Any thoughts? 

Replies (16)

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By JDBENJAMIN
05th Dec 2019 19:49

Operating such a site is surely a trade? It would not even occur to me to treat it as land and property income. It's like running a hotel, and not like letting flats. Am I wrong?

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By jonibarnes
05th Dec 2019 20:06

Thanks exactly what I wanted to hear! It’s quite a big gain so it’s nice to get some opinions on it as conformation

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By Tax Dragon
06th Dec 2019 06:22

For a bit of diversity of opinion, I will start from the point of view that it's income from the letting of land and let you persuade me otherwise. This will also help you shape your arguments for HMRC/the Tribunal far more than responses that simply suggest you're OK - so I'm doing you a favour as opposed to simply being contrary.

It's about what you client does... or did. It's not about what he has - or had. A pool table, a toilet block... who cares? If you think about it, he's offering far less than you'd get at an FHL - and we all know that FHL is not a trade (that's why it has to have special tax rules to give the reliefs).

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Replying to Tax Dragon:
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By JDBENJAMIN
06th Dec 2019 09:48

I would argue that furnished holiday lettings don't have the constant interaction with the owner that a touring caravan site has. With FHL you just give the guest the keys, and that's it for the duration, therefore it has the main characteristic of a letting. With a touring caravan site there is a constant need for a presence, like in a hotel. I agree that a permanent caravan site would not have this argument in its favour, but a touring one would.

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Replying to JDBENJAMIN:
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By Tax Dragon
06th Dec 2019 10:24

JDBENJAMIN wrote:

...a touring one would.

Some touring ones might. Some might not. I don't dispute that.

Unless you have stayed at/know the site in question, how do you know more than me about it?

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By Rammstein1
06th Dec 2019 09:07

Is he selling the land or the business as a whole? If there is a premium for the business, that could help you argue it's a trade.

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Hallerud at Easter
By DJKL
06th Dec 2019 10:02

Some worthwhile reading if only to get some case references. (Should have mentioned article re IHT but some of the thought processes likely apply)

https://www.taxadvisermagazine.com/article/turn-tide

"What is the issue?
The view has arisen in recent years that holiday lettings are investment, for inheritance tax purposes, so that business relief is not available. A recent case, about livery stables, casts doubt on this approach.

What does it mean to me?
The correct approach is to consider every business on its own facts, and not to accept generic descriptions suggesting that some kinds of business are investment and that others are not.

What can I take away?
In any case where business relief may be an issue, analyse all the facts and all the activities in which the business is engaged."

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By ms998
06th Dec 2019 12:53

Gut feeling says it is property from Land. the following article/case may help you ome to your own conclusion.

https://www.etctax.co.uk/possible-change-of-approach-by-hmrc-as-to-wheth...

https://www.bailii.org/uk/cases/UKFTT/TC/2016/TC04897.html

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By jonibarnes
06th Dec 2019 16:30

The owner was very hands on - (he lives in his house on site) and was available 24/7 he would show the campers to their pitches, fetch the gas for them, help connect them up to electrics and be around to sort any problems.

Basically it does what it says on the tin - its a touring site with a few amenities and a helpful owner. I dont think its a cut and dry one, HMRC could argue its not a trade - I could argue back that it is.

He is not selling the business - he ceased trading 12 months ago and is selling the land with permission to build some some camping pods/lodges

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Replying to jonibarnes:
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By Tax Dragon
06th Dec 2019 17:12

Personally, I would think if he made his living from it, you could try to use Ramsay (as in Mrs Ramsay) type arguments. Good luck, in this case.

If his main income derived from elsewhere (more particularly, if he had another job or trade), I think you will struggle.

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By lesley.barnes
07th Dec 2019 10:06

From what you've said initially I would have said it was a trade. But you then go on to say the client has ceased the business 12 months ago and got planning permission for pods and lodges. I think you might have a problem arguing that this wasn't investment because he has increased the value of the land significantly by obtaining planning permission. I've trawled through looking for court cases and drawn a blank to back up either view. Sorry.

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Replying to lesley.barnes:
Hallerud at Easter
By DJKL
07th Dec 2019 11:23

That would then catch anyone who obtained a planning for land/property to enhance their site value before sale, I am not aware such a path negates ER where it is merely to try to maximise the price to be received.

I always understood the main danger from receiving planning is the danger one is nudging towards development and therefore CGT is then not on point, albeit just obtaining planning and nothing else would be unlikely to get one there.

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Replying to DJKL:
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By lesley.barnes
08th Dec 2019 09:51

I don't disagree with what you are saying it is a really tricky and untested area. What I'm struggling to get my head round is whether the land is an asset of the business or the owners back garden that he has been renting out to touring caravans. Given we are told that the owner has a house on the site, I'm also thinking that the provision of the paid for toilet block and the selling of gas and electricity is trade. The renting of the pitches possibly isn't have a look at PIM4300 it's all down to whether the trade part is material and in this case it seems to be a sideline of the renting of the pitches. Can we have some clarification on how long the owner has run the caravan site, was the land his garden when he purchased the house and did he intend to run a business? Will the owner continue to be involved when the glamping business is up and running given that he lives on the site? Is he selling his house as well? I think this all comes down to the owners intention and the nature of his business. It might be worth taking specialist advice for this query.

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By whitevanman
07th Dec 2019 17:20

I think there are a number of questions (such as those mentioned by lesleybarnes) that may have a bearing on the overall position. That aside, whether there was a trade, depends (as others have said) on all the facts. My own gut reaction, based on what has been said so far, is that it would not amount to a trade, but as I say, more details would be needed.
That said, you have reported it as a trade (apparently) and there is an interesting comment at the end of the HMRC CG Manual guidance at CG63965. If an officer enquires and concludes that the activities did not amount to a trade and therefore, seeks to deny ER, the case will have to be referred to the CG Tech Specialist section. This suggests they might be uncomfortable with simply refusing the claim if the income has been assessed as from a trade. It does not mean they would not do it but it does mean that someone other than the officer working the case would review and decide the issue before any enquiry could be closed. Such things always seem to increase the likelihood of a successful outcome for the client.

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By jonibarnes
10th Dec 2019 16:18

Thanks for the input from everyone, some interesting points raised, I am going to suggest to the client that specialist advice is sought as the money involved is quie substantial.

If any one is still interested the owner ha run the site well in excess of 20 years, i am not sure if he bought it as a site or bought the house and then opened the site later - that is something i will ask him.

I do know that his private house has its own private garden area which is separate to the main site.

Once again thanks for all the replies, and if anyone knows a good VAT specialist please let me know................

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Replying to jonibarnes:
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By Tax Dragon
14th Dec 2019 07:04

There's a case for accountants to visit clients at their business premises once in a while.

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