Furnished Holiday Lettings (FHLs) have come under the spotlight in recent years, with successive governments vowing to reform the rules on the tax treatment of such properties. Please find here our guide to the current and future rules on FHLs.
Different tax rules apply to income from letting property, which is generally taxed under the property income rules. For many years, the FHL rules allowed holiday lettings of UK properties that met certain conditions to be treated as a trade for some specific tax purposes.
At the 2009 Budget, in response to proceedings instituted by the European Commission, the previous Government announced that the FHL rules would be extended to cover holiday lettings of properties situated elsewhere in the European Economic Area (EE), from April 2009. However the FHL rules were to be withdrawn completely from April 2010. The Coalition Government later announced that the FHL rules would not be withdrawn, but would continue, with future revisions of the conditions. Chiene + Tait has produced a free information factsheet that outlines the changes in FHLs. To download a copy of the factsheet, please visit the C+T website at www.chiene.co.uk
Good Practice Cash Flow Management
A vital part of running a business is collecting money from customers. All businesses must get cash flow management right in order to not only survive, but prosper. Most businesses extend credit to customers and so accept a risk. There is always a risk in lending money: the potential of bad debt and the risk that customers will not pay on the due date. A bad debt is a total loss to an organisation but businesses must remember that slow payers also erode profit. You should ask critical questions such as: of the bad debt incurred last year was any of it avoidable through better credit control and management of customers; do I take a firm line on debt collection; am I considered by my customers as a priority payment; is there a clear credit policy in place?
- Know your customer. This sounds obvious but it is extremely important. You need to know the exact name and trading style of your customer's business. Is it a limited company or an individual trading as a business? Have you got all the practical details such as who is the contact for payment queries such as full contact details?
- Confirm your terms and conditions at the outset and ensure you have clear payment terms agreed in writing in order that you can invoice promptly.
- Be prepared to compromise. If there is an obvious cash flow problem negotiate a payment plan. You may also need to look at giving a discount to secure payment, especially if the customer is disputing the bill.
- Be polite, professional and persistent. You must do what you say you are going to do, when you say you are going to do it. Maintain a positive personal relationship with your customers. You are more likely to get the response you want if you adopt a friendly approach. Don't be embarrassed about discussing overdue accounts; remember it is your money.
Profit is important, but cash is king - you need to maximise cash in your business in order to survive and grow. Making simple changes to your customer management and debt recovery process may make a lot of difference.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.