Cottages in a popular Liverpool holiday spot have been classed as second homes, leaving a couple potentially in "ruin".
Richard and Ruth Davies' business offers holiday cottages for visitors, but it has been hit hard by the pandemic.
The couple owe £8,037 in rates despite being forced to cancel bookings since opening the new venture in North Wales on September 4.
They were facing a final demand from Denbighshire Council until a temporary suspension was agreed, North Wales Live reports.
Their situation highlights an anomaly in taxation rules which may have implications for other holiday letting businesses.
Originally the council awarded planning consent for the Llangollen venture only on condition the four cottages were not used for residential purposes.
The authority has since designated them as “premium second homes” and even suggested the Davies family let them for this purpose, possibly to homeless families.
Ruth said: “That was never our intention. We feel like we are banging our heads against a brick wall and we now risk losing everything we’ve built up.”
In the run-up to Brexit Mr and Mrs Davies gave up dairy farming to focus on their new tourism venture, Vale of Llangollen Farm Cottages.
The idea was to ensure the farm remained viable so it could be passed on to the next generation.
Its parlour, former stables and an old corn mill were converted into hi-spec visitor accommodation and, in August 2019, the couple registered with online booking site cottages.com.
Until coronavirus intervened, the plan was to open for visitors on VE Day last May.
Instead the Davies family was forced to cancel advance bookings and delay work to finish off the cottages until September.
Ruth, who quit her lecturing job at Wrexham Glyndwr University to launch the venture, said: “The cottages can accommodate up to 32 people and on Friday, September 4, we had 30 guests booked in to stay.
“But because of the lockdown, there was still last-minute work to be done - baths still lacked panels and doors didn’t have handles.
“That Friday was like Fawlty Towers crossed with Ground Force as everyone rushed to get the work done.
“Our guests sat on chairs waiting for their cottages to be finished. But they were very good about it and they all said they loved the accommodation.”
But within a fortnight the UK Government introduced its Rule of Six, limiting guest numbers at two of the four cottages.
Enter your postcode below to find the latest covid figures where you live:
That was followed by the October firebreak lockdown in Wales, then England’s lockdown in November.
The pre-Christmas lockdown in Wales also saw £10,000 worth of advance bookings cancelled.
Meanwhile the family received its first bill following assessment by the Valuation Office Agency (VOA).
To their horror they discovered the cottages had been charged council tax rather than business rates, meaning they could not apply for business resilience loans from the Welsh Government.
All start-up holiday let business are placed on a probationary period in which they are initially charged council tax until they have proved their accommodation is available to let for 20 weeks (140 days) or more in a calendar year.
Mr and Mrs Davies met this requirement – but not another that is unique to Wales.
Unlike in England and Scotland, owners in Wales must also prove their holiday properties have been actually let for at least 70 days in a calendar year.
For a new business affected by successive lockdowns, Ruth said this extra condition was impossible to meet.
She said: “We were advised to appeal to the VOA, which we did, though this process can take up to six months.
“We were also told to write to local politicians. We have sent several emails to Ken Skates, our local MS, but each time we just received automated replies saying we should apply for loans - which we can’t because we are not business rated.”
Worse was to come when Denbighshire Council designated the four cottages as holiday homes – even though their planning consents expressly forbids them being used for this purpose.
This resulted in a 50% levy on top on the council tax charge – a standard penalty used by many councils in Wales to discourage excessive numbers of second homes.
In an attempt to help, the authority suggested the couple remove all furniture from the cottages so that they could claim council tax relief.
Another suggestion was to let out the cottages as residential properties, even though this risked breaching planning consents.
The Davies family hopes to get a positive outcome from their VOA appeal – but until then their cottages will remain classed as second homes by Denbighshire Council.
The authority said its hands were tied, telling the Daily Post: “The regulations under which the council must operate state that any additional properties are classed as second homes for Council Tax purposes until they meet the criteria which allows them to be classified for business needs,” said a spokesperson.
“The Valuation Office Agency determines whether a property will appear in the Council Tax and Business Rates list.”
A VOA spokesperson said it was unable to comment on individual cases.
The council said it understood the “unfortunate circumstances” in which the Davies family had found itself.
“We have spoken to the Davies’ about this issue and have offered them advice and guidance around the regulations that govern additional properties and holiday lets,” it added.
“We have also provided information on discounts and exemptions available to them based on their current situation.”
NFU Cymru has asked the authority to put the Davies’ account on hold until a solution can be found.
Mr Roberts said this has now been agreed pending the family's appeal to the VOA.
