In Executors of the Late Sheriff Graham Loudon Cox vs HMRC [2020] TC07919, the First Tier Tribunal (FTT) dismissed the taxpayer’s appeal for Business Property Relief (BPR) on a holiday lettings business finding that there was nothing exceptional about the business to elevate it beyond being one of mainly investment.

  • The Late Sheriff Graham Loudon Cox’s estate included ‘Crail House’, a property subdivided into five flats.
  • Sheriff Cox owned four of the flats, operating a qualifying Furnished Holiday Let (FHL) business from three and lived in the fourth flat.
  • The activities carried on by the FHL business were summarised and categorised by the FTT as:
    • Investment activities; the provision of accommodation, parking spaces, laundry facilities, repairs and maintenance of the buildings, gardens and grounds, administration in dealing with bookings and advertising the apartments.
    • Incidental or ancillary activities; the provision of electricity and water, appliances and furniture, kitchen utensils and crockery, kitchen basics such as tea and coffee, consumables such as washing up liquid, and toilet paper, cleaning the apartments, laundry of bed linen and towels and welcoming guests.
    • Non-investment activities; the provision of books, DVDs, information leaflets, use of tennis or badminton racquets, crab lines, frisbees or buckets and spades.
  • Business Property Relief (BPR) was claimed in respect of the FHL business on a value of £562,040.
  • HMRC denied the BPR claim. The Executors appealed to the FTT.

Business Property Relief:

  • Provides relief from Inheritance Tax (IHT) on the transfer of relevant business assets at a rate of 50% or 100%.
  • BPR is not available if the business is one of 'wholly or mainly' making or holding investments or dealing in securities, stocks or shares, or land or buildings.

The FTT dismissed the appeal, finding that:

  • The ancillary activities were an integral part of the provision of the accommodation and so were considered part of the business of holding the property as an investment.
  • The non-investment activities were so insignificant in scale as to be negligible.
  • There was no evidence that extra services such as dog-sitting, childminding, transport, breakfast and supper were rendered to guests with any regularity.
  • There was nothing exceptional about the business to elevate it to the level of the business found in The Personal Representatives of Grace Joyce Graham (deceased) v HMRC [2018] TC06536 and as such the letting business fell 'firmly on the investment side of the line'. The predominant activity was to provide furnished accommodation to holidaymakers on a short-term basis.


IHT Business Property Relief
A guide to what Business Property Relief is, when it can apply and pitfalls and planning points.

Furnished Holiday Letting
What is furnished holiday letting? When does a let qualify? What special tax treatments apply?

External links

Executors of the Late Sheriff Graham Loudon Cox vs HMRC [2020] TC07919