Income from furnished holiday accommodation in the United Kingdom is treated as a trade for tax purposes. The letting of property is not a trade, but some of the tax rules applicable to traders are applied to those with furnished holiday lettings. These include loss relief, capital allowances and the income accounts as relevant earnings for pension purposes.
However, this treatment is confined to property situated in the United Kingdom, and HMRC have been advised that this is not in accordance with EC law. It may be remembered that they received similar advice regarding agricultural property and woodlands, and in the Budget it was announced that the relief would be extended to all agricultural property in the European Economic Area (EEA). Not so with furnished holiday accommodation. These rules are going to be repealed from 6 April 2010. However, until that time HMRC will regard the furnished holiday accommodation rules as applying to such accommodation elsewhere in the EEA.
HMRC will also accept amendments to tax returns that are within the normal time limits. In addition, until 31 July 2009, they will accept late amendments to individual tax returns for the year ended 5 April 2007 and corporation tax returns for periods ending on or after 31 December 2006.