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High anxiety

06 October 2009
Issue: 4226 / Categories: Forum & Feedback , Income Tax
Has letting income been artificially inflated to make a property eligible for loss relief as a furnished holiday let?

I have a client who has a holiday home on an island off the west coast of Scotland that has always made heavy losses and never been very popular in terms of lettings. The substantial losses each year are offset at 40% tax against his salary earnings.

I have just completed his 2008/09 tax return and notice that although he has achieved 70 days of actual lettings (a necessary condition of claiming loss relief) 14 days were shown as being relevant to his personal secretary at a greatly reduced fee.

I am suspicious of this entry because I know the secretary is severely disabled and it seems very unlikely that she would manage a long trip from Devon to a Scottish island famous for holidaymakers who like mountain climbing. I suspect he has created this entry to ensure the 70-day target is met.

I wonder what readers’ views are...

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