The new Buy to Let Tax Advantages

We have finally now published the new Buy to Let Tax Advantage Page, which we hope you will find useful.

There are many compaies now guaranteeing a per centage rental income for the first two or three years after purchasing a holiday lodge and I am wondering if you would find it useful if we were to publish a feature page giving you an instant list of our clients who are doing that.

Your replies would be very helpful.

Ed.

",but there are no capital allowances for the cost of the lodge itself." 

er not quite. I think you should talk to an accountant before offering that sort of advice.

HI Windermere

This page was written by an acountant who's practice specialises in property.

However, I know you keep your 'ear to the ground' and will double check with him.

Hi Windermere

Well I have heard back from my accountants and he was half right I guess. This sentence stemmed from the fact that he thought a lodge was a log cabin and didn't realise there was a difference between the two.

I have made an amendment on the page, which you can see here

Basically, there are no capital allowance for the cost of a log cabin, which is an immovable unit of accommodation, but there are for a holiday lodge, provided that it is capable of being moved and sited on a licensed 'caravan' park.

Thanks for giving me a dig to check.

Ed.

No worries - I'm not sure the distinction between a log cabin  and a lodge is valid - what IS the difference?.  The key thing is that the lodge  (or log cabin or caravan)  remains potentially mobile (I think having wheels is a a key part of the definition for some reason, even though they are all moved on flat bed trucks and with cranes) and is on a holiday park (not a residential one).

It can then be treated as plant and equipment for the purposes of capital allowances

http://www.hmrc.gov.uk/manuals/camanual/ca22100.htm

"Accept that a caravan, which is provided mainly for holiday lettings on a holiday caravan site, is plant whether it is moved or not. Caravans occupying residential sites do not qualify for capital allowances. As far as a holiday caravan site is concerned, treat anything that is treated as a caravan for the purposes of:

1. the Caravan Sites and Control of Development Act 1960 (c. 62) (CSCDA), or
2. the Caravans Act (Northern Ireland) 1963 (c. 17 (N.I.)),

as a caravan. Those acts give caravan a wider meaning than its normal one. In them, caravan covers double units delivered in two sections and then joined together and wooden lodges provided these are moveable. But it does not cover structures that are not moveable, even if these are otherwise identical."

Hi Windermere

We have described the difference on our website.

There are many farm diversifications and fisheries providing accommodation, which are not technically 'caravans'. Some are sited on parks licensed for holiday use, but many are built on land with planning for holiday use, but not licensed.

Currently we have a piece of land with planning permission for log cabins and that doesn't require a Site License. However, if I were to change the specification of the accommodation to BS3632, I would have to apply for a Caravan Site License as well.

Hope that helps.

Ed.

"we have defined these holiday homes, but purely for our web site only."

Yes- you have defined them technically from a specification point of view, but that may not be a difference that the taxman cares about I'm afraid and that is what you are writing about here.

As far as he is concerned it is mobility and not BSXXXX that counts from what I have been able to ascertain. I may of course be wrong but the quote from HMRC I gave above seems quite clear to me ....

There have been other VAT Tribunal cases as well.

It all sems very clear to us and to other colleagues. Looks like we might have to agree to disagree on this one.

Ed

Well I am glad to see you have edited the advice to reflect the HMRC information anyway.

Hi Ed,
In response to your posting of 11/12/11 I note that you imply that you would have to have a caravan site license to enable you to charge caravans at ZR for VAT. I have a similar site with log cabins that comply with current caravan definition and have received an HMRC ruling (of sorts) that confirms ZR but makes no mention of requirement for caravan site licence and site currently has planning permission for holiday units as does yours. I have seen nothing in legislation thus far that indicates the status of the land affects VAT treatment in any way; only the type of unit (ie moveable in a nut shell). Can you tell me why you think the status of the land is of any relevance please?

I also don't understand why you have refered to BS 3632 as currently legislation does not refer to this (I know new leg does); only that units are capable of being moved. 

I realise that this discussion is likley to become irrelevant if new legislation comes into place in Oct 12 but my question still has relevance up to this date. With regards to the new legislation how does a supplier go about proving compliance with BS 3632? Do they need BSI written approval for example or is it up to HMRC to demonstrate non compliance (ie innocent until proven guilty as it were)?