Service charge expense during a void period - how long before intent to let in doubt?

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    Service charge expense during a void period - how long before intent to let in doubt?

    I gather it is allowable to claim expenses on a rental property including service charge and utilities during a tenant void. my question is how long would HMRC deem an acceptable void before questioning if you were truly looking to let the property? I purchased a new build property in April that came with numerous snags. By the time I had it snagged, repaired, realised that it needed to be furnished, suffered a bereavement, got the flat furnished, went back to market, it was Oct the following year before I had my first tenant move in. Meanwhile I had been accruing expenses. Can I claim?

    #2
    If the building was purchased solely to be let out, the expenses should be allowable and treated as incurred on the first day of the first tenancy.

    It would be different if it was a property that you had lived in before, because it could be argued that the expenses weren't all necessarily related to the business, but for a new build property, HMRC can't tell you how efficiently to run your business.
    Your loss is greater than theirs!
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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      #3
      thank you for your reply. your thoughts match my own hunch on this. my tax adviser advised against claiming which I found surprising. i think he felt that a property sat empty for 18 months would look suspicious. i have one other property that suffered the same fate. however, I decided to make that property my residence after the 18 month void period i.e it was never rented out. now, in this case I am inclined to not claim the expenses because that does look suspicious. fair?

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        #4
        I don't understand your advisor's point.
        It might "look" suspicious, but it isn't actually suspect - it's just some expenses that you incurred when not running your business particularly effectively.
        That tends to cost money - and for a business that's allowable against income.

        Your tax advisor does this for a living and I don't, so I'd never recommend following the advice of a "random bloke on an internet forum" over a professional.
        I might be tempted to ask what does possibly looking suspicious actually risk?
        If they queried the expense, you would be able to show that you'd incurred the costs and you can explain the delay (and it will have cost you a lot more than the tax HMRC won't be able to collect).
        If he thinks your entire tax affairs for the last six years could be reviewed, maybe fair enough.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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          #5
          Again you echo my sentiments. I’ve only just started speaking to this adviser. Maybe I’ll seek a second opinion within the same firm. I don’t understand how numbers on a page attracts suspicion anyway, especially if you’re using cash basis where not allocating costs and income to the relevant period could lead to all kinds of declarations but I digress.

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