Accounting Web reporting on the new Chancellor's decision on FHLs stated that HMRC has released a question and answer document indicating that while the current form of reliefs will all continue for 2010/11, there will be a consultation over the summer of 2010 to establish the appropriate treatment of furnished holiday letting activities from April 2011.

There is therefore an opportunity to re-look at the reasons for abolishing the favourable regime – which was largely prompted by the requirement to extend the generous tax treatment to properties in the European Economic Area. Special rules had previously applied only to holiday lets in the UK, and there was concern that the widening of the scope might cost significant amounts of tax revenue.

The information now available indicates that the consultation would look at "a proposal" (which indicates that there is a formal proposal in mind, rather than an open consultation) which would:

• Ensure that the FHL rules apply equally to properties in the EEA
• Increase the number of days that qualifying properties would have to be available for, and actually let as a commercial holiday letting
• Change the way in which FHL loss relief is given