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Focus GroupsVAT – Bloodstock BreedersHM Revenue & Customs will continue to allow breeders of thoroughbred racehorses to be registered provided they are able to demonstrate that the horses are being breed for sale (commerciality). Meeting this condition can prove problematic as the breeder will be required to demonstrate that it is a business and not a hobby. HM Revenue & Customs will allow registration prior to making any taxable supplies as they recognise that a mares progeny will not be sold immediately following birth.HM Revenue & Customs will accept the breeders engage in racing activities with the purpose of enhancing the value of the stock and/or their business, these activities are by way of the business. For these purposes stock means colts, fillies and homebred geldings. Breeders who meet these conditions will be able to reclaim all tax incurred as input tax in accordance with the normal rules. Output tax will become due on the full amount realised on the sale of all stock. However, no output tax will be due on the transfer of stock to training if the transferor is registered for VAT. From experience, the HM Revenue & Customs prefer to see at least three broodmares in a breeding business to demonstrate commerciality. However, in certain circumstances we have successfully demonstrated this is not always the case and that owning one or two broodmares can be considered as commercial as three broodmares. If you would like more information relating to the scheme or would like help in obtaining registration then contact Gary Frear on 01223 728222 or email gfrear@pem.co.uk
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