New dwelling could be used only as a holiday let

The taxpayer obtained planning permission to build a new house on two floors in South Downs Country Park. The planning consent approved the construction but clearly stated that it could only be used as a holiday let and must be available for such letting at least 140 days each year. The consent recognised the fact that the national park area was used for holiday rather than residential purposes.

The taxpayer submitted a DIY refund claim to HMRC (VATA 1994 s 35) on the basis that the property would be his only UK home. He said when it was used as a holiday let he and his partner would either live in Italy or stay with friends. HMRC rejected the claim on the basis that the property could only be used ‘in the course or furtherance of any business’ rather than as a private residence of the claimant....