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October 17, 2013
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Pawson Case Update - Business Property Relief & FHLs

The Executors of the Estate of Nicolette Pawson have been denied leave to take their case to the Court of Appeal in relation to their claim for Business Property Relief (BPR) on the furnished holiday letting (FHL) property owned by the deceased.

The executors claim was initially upheld by the First Tier Tribunal but that decision was overturned when HMRC appealed to the Upper Tribunal earlier this year.

Leave to appeal was denied even though application was made in written and oral terms. Lord Justice Briggs said there was no realistic prospect of the appeal succeeding, because ordinary property lets did not provide sufficient additional services to qualify as a business.

It will be interesting to see now whether furnished holiday lets where many more services are provided than in the Pawson case can withstand challenge from HMRC.

Certainly this is seen as an important case win for HMRC and must be considered by all taxpayers considering a claim for Business Property Relief on furnished holiday lets.

However, each case must be taken on its own merits and if the facts and pattern of services can be clearly contrasted from the Pawson case then the claim could still have merit.

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