In Executors for the Estate of the late Gertrud Tanner v HMRC [2025] TC09456, the First Tier Tribunal (FTT) found that a Furnished Holiday Letting business did not qualify for Business Property Relief (BPR). The business was mainly one of holding investments.
Ms Tanner died on 17 September 2017. Her estate included a business which provided holiday accommodation, on which the executors claimed Business Property Relief (BPR) for Inheritance Tax (IHT) purposes.
- At the time of Ms Tanner’s death, the business had five self-catering holiday-letting units that were furnished and decorated to a high standard.
- The properties were generally clustered along a private cul-de-sac, which also included Ms Tanner’s residence. Her home included an annexe containing a reception area, office and a garage used in the business.
- The business engaged several staff: a full-time manager and up to eight part-time employees.
- The amount charged for bookings included the accommodation, gas and electricity, bed linen and towels. For one particular unit, bathrobes and slippers were also included.
- The accommodation included full kitchen facilities, laundry facilities, heating and a telephone that could receive incoming calls.
- A small number of books and DVDs were provided. One property's garage had been partially converted into a games room.
- Each property was provided with tea, coffee, milk and sugar, eggs, homemade scones with jam and butter, the local newspaper, a weekly weather forecast and a tide timetable.
- Tourism information would be given verbally and tourist information brochures and leaflets were provided.
- The business undertook housekeeping and cleaning services, primarily on changeover days, although additional cleaning services were provided at an extra charge when customers requested.
- In November 2020, HMRC issued a determination denying a claim for BPR in respect of the business, on the basis that it consisted wholly or mainly of making or holding investments.
- The executors Appealed to the First Tier Tribunal (FTT).
The FTT analysed each element of the business’s activities. The tribunal noted that the quality of the accommodation's fit-out and furnishings provided was not a deciding factor. It was the nature of the activity rather than the intensity (in time or funds committed) that was important.
- While housekeeping, cleaning, laundry, information packs, welcome baskets, books and DVDs etc were non-investment activities, this was work embedded in any Furnished Holiday Letting business and was characteristic of many such businesses.
- These activities were ancillary or incidental to the business and neutral in terms of the availability of BPR. While the activities involved a significant amount of time and cost, that did not mean they should be given more weight.
- Entries in the guestbook focused on the accommodation and location, not the provision of any services.
- While the staff enjoyed meeting, interacting and assisting their customers wherever it was feasible, this was a characteristic of the staff involved. It was not advertised nor was it something that could be considered a service provided by the business under a contract.
The FTT found that:
- None of the above factors individually or in the round, were sufficient to take the business over the non-investment line.
- The view that the hospitality aspects of the business did not outweigh its investment nature was supported by the fact that the business could not charge a premium in the local market and instead set its prices in line with local competitors, despite believing that it offered services not provided by those competitors.
- As a whole, the business primarily provided accommodation to customers. Any additional elements were ancillary to the accommodation or insufficient to make the business a 'non-investment' one.
- Customers were buying the use of a property in which they could stay and use as their own, not purchasing a wider package of services which outweighed the provision of a place to stay.
The appeal was dismissed.
Editor’s comment
This case demonstrates the high bar to be met for a furnished holiday letting business to qualify for BPR.
It was found in the binding Upper Tribunal decision of Pawson that the starting point when considering whether or not a business such as this qualifies for BPR is that: “The owning and holding of land in order to obtain an income from it is generally to be characterised as an investment activity ... such an investment could be actively managed without losing its essential character as an investment”
The approach was subsequently endorsed by the Court of Appeal.
Useful guides on this topic
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Furnished Holiday Letting (FHL)
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Furnished Holiday Letting (FHL): Abolition of the regime: Briefing
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External links
Executors for the Estate of the late Gertrud Tanner v HMRC [2025] TC09456
