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Graham – what is enough?

The case of The Personal Representatives of Grace Joyce Graham (Deceased) v HMRC [2018] UK FTT 0306 (TC) looks once again at how many additional services is enough to allow a claim for Business Property Relief (BPR) on holiday accommodation.

Relevant business property

The business in question was Carnwethers, a farmhouse in the Isles of Scilly where the deceased lived and ran four self-contained self-catering flats. Numerous services were provided including access to a solar-heated pool, sauna, barbecues and games room on site; the option to hire bikes and an electric golf buggy; the provision of towels, bed linen, homemade and purchased food. There was extensive help and assistance from the Deceased’s daughter, as countless “Trip Advisor” reviews would attest. The crux of the matter thus came down to whether these additional services were enough to take the business over and above one of “wholly or mainly holding investments”.

In arriving at their decision, the FTT looked to the cases of HMRC v George [2004] STC 147 and Philip Norman McCall and others v HMRC [2009] NICA 12 (“McCall”). These cases concerned a caravan park and grazing agreements respectively, but both considered the construction of section 105(3) and the principles derived thereon where summarised by the FTT as follows:

  • The test to be applied is that of the intelligent businessman and whether they would deem it to be an investment (McCall [10]);
  • A property may be held as an investment even if one must carry out incidental management and maintenance work, find tenants and grant leases (McCall [14])

Farm diversification

Many lessons can be learned from this case for those wanting to achieve BPR. It is also an interesting case for farmers who have diversified with furnished holiday accommodation and other enhanced service activities on the provision of property, eg liveries and storage. The key is to identify what the predominant nature of the supply is and what evidence can be obtained to support this. The mere maintenance of property and negotiating with customers might not be enough to achieve BPR, despite much time spent on doing so. However, certain activities which can be deemed as being both an investment and a service, such as an exceptionally well designed and maintained garden, can help tip the balance in conjunction with other services so as to achieve BPR.

Whilst the furnished holiday accommodation case is certainly a win for the entrepreneurial, hardworking diversified farmer who has found his efforts all too often quashed by the tax system, tax advisers are arguably no clearer on the level of services that are really needed for furnished holiday lets and liveries alike to achieve business property relief and the question of “how much is enough” remains unanswered. In the meantime, all diversified activities including furnished holiday accommodation need to maximise the services to maximum impact.

HMRC guidance ideally needs to be more specific on the quantum of services provided. However, owners of holiday accommodation and diversified farmers need to accept that whatever the outcome of further tribunals and guidance the amount of services must be maximized to achieve BPR. The practical tax tip for the owners of furnished holiday accommodation and diversified farm activities must be to increase services and document such activity and retain robust evidence whilst more guidance is provided. The Graham case was deemed to be an “exceptional” level of services. In the meantime, exceptional services are needed.

Reproduced by kind permission of LawSkills Ltd from their website ( A site dedicated to helping Private Client Practitioners.

By Julie Butler
Posted October 11, 2018
In Tax

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.


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