VisitBritain responds to Government plans for FHL rules

VisitBritain recently released a statement saying that in principle it endorses the Government’s decision to abandon plans to repeal the Furnished Holiday Lettings (FHL) rules. It also welcomes the Government’s willingness to hold a dialogue about the measures to be put in place, but it lists a number of concerns as to the approach taken by both the Government and the HMRC and some of the measures mooted so far.

The Government’s decision to drop the repeal of the FHL rules is indeed good news, but there is still the need to comply with the EU Treaty obligations, which say that the relief provided by these rules needs to apply to all (including British citizens living abroad) or to no one. And VisitBritain agrees with the Government that the FHL rules should only be used for genuine commercial businesses set up to turn a profit.

The Government’s decision to therefore raise the threshold from 70 to 105 nights from April 2011 is, in principle, a good one, and VisitBritain supports this decision. But this decision fails to take into consideration certain aspects. The first of these is that using a blanket measure that applies equally to all fails to take into consideration geographical differences, notably remote areas that don’t see as much traffic as more affluent ones.

VisitBritain recommends that the threshold should be adapted to the different geographical areas in Britain and Northern Ireland in a manner similar to the differential eligibility threshold already in use for discounted fuel duty.

VisitBritain also proposes to make allowances for the uncertainties of severe weather occurrences, for instance, or other circumstances that cannot be foreseen and that would have an impact on both the amount of time properties need to be made available (210 days a year) and the number of days they are let (105 nights).

VisitBritain proposes to give operators the ability to average occupancy levels across all the units within their business (if the business itself qualifies for FHL relief) and to allow them to average occupancy over several years (the exact period having been previously agreed).

Finally, VisitBritain deplores the Government’s proposal to only allow operators to off-set losses against income from the same furnished holiday lettings business that made the losses. Instead, VisitBritain supports the proposal by the Tourism Alliance and the Federation of Small Businesses to allow genuinely commercial and profit-seeking businesses to have access to loss relief for the first four years of operation.