IHTM25277 - Caravan sites and furnished lettings: Hotels, Bed and Breakfast and Residential Homes

IHTA84/S105 (3) will not usually apply to these businesses in view of the level of services provided. This has been recognised by the courts who have distinguished these businesses from mere exploitation of land. In Griffiths (Inspector of Taxes) -v- Jackson 56 TC 583 at page 593, Vinelott J observed:

“The distinction between a hotelier or a lodging house keeper, on the one hand, and the owner of a property who lets furnished rooms and provides services is no doubt in practice a narrow one, more particularly in these days of self-service hotels and motels, but the principle is clear and in the present case there can be no doubt on which side of the line the taxpayer’s activities fall.”

Only in cases where it is clear that IHTA84/S105 (3) applies should you pursue it. Any doubtful cases must be referred to the Litigation Group before an entrenched position is taken.