Terms & Conditions

[Anonymous]

A claimant owns 2 racehorses. He is registered for VAT and receives regular payments of VAT credits into his bank account. The VAT credits are because he employs a trainer and is charged VAT which he can claim back.

We have made the decision that he runs a business because of the VAT registration, and have asked for accounts which he has not provided. He has appealed our decision that he is running a business.

He advises us that we should not consider that he is running a business because the Inland Revenue do not treat ownership of racehorses as a business unless they are involved in the day to day running of the stables as a trainer. He states the Inland Revenue treats him owning racehorses as a hobby and any money he wins from the racehorse is money received from gambling therefore his winnings are not earnings.

Does anyone out there have any experience of dealing with a claim like this and could they give me any advice on how they treated the claim?

Thanks

[jmembery]

If the horses are not “assets of a business” would you not treat them as capital?

[markp]

But how do you value them?

Do I know what I'm doing? The jury's out on that........................

[Kevin D]

[size=9:a8ad2bd9f4][i:a8ad2bd9f4]nag, nag, nag, nag, nag, nag, nag…….[/i:a8ad2bd9f4][/size:a8ad2bd9f4]

[seanosul]

HMRC must be treating him as a business as otherwise he is an end user and liable for the VAT.

[jmembery]

An “average” yearling costs about £7,000 – £10,000.
Most racehorses cost their owners £200-£300 per week each to stable and train.

However, the more I think of it the more I think you were right to start with. If he claims back the VAT then he has a business. What the inland revenue do is no real concern of yours, except that he obviously can’t claim tax off his profit.

[Kevin D]

A business, or not? Just a note of caution.

Although the VAT / tax status is potentially persuasive, it’s worth bearing in mind [b:9532d039d0]R(FC) 2/92[/b:9532d039d0] in which is was found that a certificate of exemption (re NI contributions) was not necessarily conclusive as to whether or not a person was a “self-employed earner” [u:9532d039d0]for benefit purposes[/u:9532d039d0].

By analogy, even if all the evidence shows that HMRC are treating the clmt as if he is working; it isn’t inconceivable that a different finding could be made in the context of benefits (barring any relevant law change or deeming provision).

[b:9532d039d0]R(FC) 2/92[/b:9532d039d0] – courtesy of Rightsnet:
http://www.rightsnet.org.uk/pdfs/rfc/2_92.pdf

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