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VAT – Services supplied to Overseas Bloodstock Owners

There has been some confusion since the introduction of new rules on 1 January 1996, which affect the VAT liability of some services provided in connection with mares owned by overseas owners visiting UK stallions in 1996 and subsequent years. Set out below is the current position as agreed between HM Revenue & Customs and the Industry.

Relevant services can be treated as Outside the Scope of UK VAT or zero rated only if the mare leaves the UK. Customs require that commercial evidence of departure from the UK be obtained to justify such treatment. As the services will be performed some time before departure from the UK, suppliers of Relevant Services have two options open to them. They can:-

(i) Charge VAT at the standard rate in the first instance, refunding the VAT subsequently to the owner when evidence of departure is obtained; or
(ii) Treat the supply as outside the scope/zero rated from the outset relying on subsequent receipt of evidence of departure/export to outside the member states.

The choice of option will be commercial judgement for the supplier of the services. If treated as VAT free initially and no evidence of departure from the UK is obtained, the supplier will be liable to account for the VAT not originally charged.

Where supplies of service are supplied to an Owner/Breeder in another member state and treated as outside the scope of VAT in the UK, a VAT charge does arise in the Owner/Breeders member state. However, this is the responsibility of the Owner/Breeder and not of the UK supplier. No such liability applies to zero rated supplies where the Owner/Breeder is resident outside the EU.

Relevant services, which are within these provisions, are any services constituting direct work on the mare, or foal where appropriate, including:-

Nomination

Keep

Veterinary Services

Blacksmith

Dentistry

Worming

Where services are provided which do not qualify, VAT may be chargeable at the standard rate e.g. consultancy/breeding advice. (Guidance in HM Revenue & Customs Notice 741 VAT: Place of Supply of Services).

Transport

The transport of a mare between destinations within the UK is standard rated. However, if the supply of transport is initially made to the UK stud where the mare is boarding, then the stud can recover the VAT, and can include the transport in its onward VAT free supply to the owner.

The transport of a mare travelling either way between the UK and another EU member state is outside the scope of UK VAT if it is supplied to an EU VAT registered business.

Transport is zero-rated in the UK for a mare travelling either way between the UK and a non-EU member state.

The below table sets out the circumstances where mares and/or foals will qualify for this VAT free treatment. Where services are provided which do not qualify, VAT will be chargeable at the standard rate.

There may be circumstances where mares may not leave the UK immediately or shortly after the services are carried out but where nevertheless, relevant services will be eligible for treatment as outside the scope/zero rated. To determine whether such circumstances qualify, reference should be made to the National Telephone advice line 0845 010 9000.

Supplies of relevant services to Mares (and their foals) visiting UK Stalions from 1 January 1996
Mares
1. Where mare leaves the UK
(a) Owner/Breeder registered for VAT in EU (not UK) Outside the Scope of UK VAT
(b) Non EU Owner/Breeder, providing mare imported into/acquired within EU for covering and exported from EU. Zero Rated
Foals
2. Where foal leaves the UK
(a) Owner/Breeder registered for VAT in EU (not UK) Outside the Scope of UK VAT
(b) Non-EU Owner/Breeder and foal exported outside EC Zero Rated