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HMRC internal manual

Business Income Manual

Historic houses: fees for admission to view

S10 Income Tax (Trading and Other Income) Act 2005, S38 Corporation Tax Act 2009

Occupiers of property may contend that, in admitting the public to view their houses, gardens etc on a fee paying basis, they are maintaining the property solely or mainly as a show-place, that it is managed on a commercial basis with the object of making a profit and that they are, therefore, exercising a trade consisting of the commercial occupation of land.

The factors which should be taken into account in deciding whether there is such a trade are as follows:

  1. The extent to which the property is likely to attract visitors, having regard, amongst other things to its historic, architectural and, in the case of gardens, horticultural interest.
  2. How much of the property is set aside as a show place. A substantial part of the property should be open to visitors, but appropriate allowance should be made for utility and other rooms of little interest to the public, and for those houses where the delicate condition of the fabric prevents parts from being shown.
  3. The number of days on which the property is open to the public. This would usually have to be a substantial number of days in the year but must be compatible with the aim of making a profit from opening. For example, where opening on 75 days or less might be expected to show a higher return than, say, 125 days, the former figure would satisfy this requirement. Days on which the house is open by appointment to groups and parties can also be taken into account.
  4. The amount of organisation for the attraction and reception of visitors, for example, adequate advertising and publicity, the provision of ticket office, car parks, refreshments and guides, the sale of postcards and guidebooks. It must be shown in general that a definite organisation has been set up for attracting and dealing with visitors.
  5. Whether the whole of the activity is undertaken with the intention of making a profit.

Where a property is opened to the public for the first time, the `realisation of profits’ test should be regarded as on first consideration satisfied where a sufficient number of visitors is attracted to suggest that there is a reasonable prospect of profits being made in the foreseeable future. A property receiving 15,000 visitors a year from regular opening should be regarded as satisfying this test in the years when the property is first opened to the public. This is not, however, a minimum figure for the number of visitors which every house must achieve in order that the opening can be regarded as a trading activity. A lesser figure would be appropriate where the circumstances of the property do not permit this level to be achieved, for example, on account of its size, accessibility or the delicate condition of its fabric.

In practice, the net proceeds from special attractions, events, tea-rooms, sales brochures and souvenirs which can be associated with the showing of the property to the public should be taken into account in determining whether the `realisation of profits’ test is satisfied, and should not be separately charged to tax.

The investment of a substantial amount of capital to provide improved or new facilities for sightseers (for example, a new car park or refreshment rooms) should, in general, be regarded as evidence of an attempt to attract more visitors and make the enterprise profitable.

The above advice is reflected in a leaflet produced by the Historic Houses Association, which is given to their members. Where a copy of this leaflet is required it can be obtained from CTISA (Technical).

In cases of doubt as to whether it should be conceded that a trade is being carried on, a report should be made to CTISA (Technical).

Where the trading basis has been conceded but there are continued substantial losses over a long period with no apparent prospect of there ever being a profit, a report should be made to CTISA (Technical) for advice before the trading basis is withdrawn.