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VAT on Livery

Livery yard owners concerned about the VAT
regulations following the recent test case PLEASE consult
your accountant or tax adviser.  The information here is background
discussion only and should NOT be relied on by any business.



-- Posted by Trezara on Oct. 2, 2001

Has anyone had any success persuading their yard not to charge VAT on their livery bill?  VAT on my bill is almost 100 a month which I could well do without.  I don't want to be too pushy with the yard owner as I am SOOOOOOO happy there, but it's a lot to be overcharged per month.

If you did get VAT removed - how did you persuade them?

-- Posted by AlisonWoods on Oct. 2, 2001

It rather depends on how you are being billed.  Suggest they bill you for stable rent separately - rent is not VATable whilst services are (mucking out etc).  If they cover a lot of basic services under the banner of rent then the VAT portion would be reduced for you and for them.  You should also bear in mind that the VAT status of livery yards and riding schools is going to change very shortly.  They really should consult their accountant with regard to VAT.  It may be beneficial to all in that they may be able to charge slightly more in the way of rent whilst reducing the VAT they pay.  Your overall bill will reduce and their takings could also increase.  Most importantly get them to talk to an accountant who is up to speed on horsey issues.

-- Posted by JanetGeorge on Oct. 2, 2001

There was a change to the treatment of livery for VAT purposes following a test case a few months ago - more

Many yard owners would not want to backdate changes, because that could mean THEY would have to pay back the VAT they reclaimed on building, equipment etc.  

They can opt to charge VAT but unless they're planning a lot of expenditure on non-exempt supplies, I wouldn't have thought it would be worth their while because most of the regular costs of a livery yard (feed, labour etc.) do not attract VAT so it's a lot of paperwork for nothing.

It's possible your yard owner doesn't know about the changes - have you inquired?


-- Posted by Roo on Oct. 2, 2001

If a yards turnover is more than 52K they have no option but to become registered for VAT, which means nasty mr tax man gets even more of your hard earned cash.

A yard can also voluntarily register if their earnings are below this. This means that they must charge their customers when appropriate but they will get any VAT back on their purchases. This can be beneficial if their customers are VAT registered as the customer will not bear any of the extra bill as it will be reclaimable, however if the customer base is not VAT registered this will increase the cost of the service to them.

I'm not sure about the rent being vatable as I have only ever dealt with commercial (office) rental which does have VAT on it. The rules may be different for private individuals. (Plus our tax rules are slightly different in the IOM but still similar)

I'm afraid it is not up to the yard owner whether they charge VAT or not but I agree that a clever accountant could help the yard out with saving themselves and customers on unnecessary tax.


-- Posted by AlisonWoods on Oct. 2, 2001

Yes there is a threshold for having to be VAT registered but you don't charge VAT on everything.  A prime example is children's clothes, there are VAT free which is why I buy children's jockey skull caps for riding and not the adult version (the only difference being the Thelwell picture in the lining).   Rent is not Vatable likewise some feeds are not VATable either.  Services are VATable though (which will cover mucking out, taking to and from field, holding for vet/farrier etc).

We chatted to our livery yard owner (who was getting v close to having to close) and armed with the above basic info, she spoke to her accountant and her VAT bill was reduced from 3.5K per quarter to 350.  As I say the VAT regulation for livery yards and riding schools is changing.  With the new regs she thinks her bill will be reduced again by almost half.

It will be well worth your livery owners while to spend the money on speaking to an accountant - it really will be money well worth spending.

-- Posted by Cob Nut on Oct. 2, 2001

So far as the issue of VAT on rent is concerned, I BELIEVE (although I may be wrong) that the correct position is this. A landlord may CHOOSE whether or not to charge VAT on the rent (known as "the option to tax") BUT once the choice has been made in respect of a certain piece of land, rent on that land will be taxable for ever more. SO, over time, all land (or all land which is let for commercial purposes, at any rate) will eventually become VATable.

As I say, though, this is only my understanding, and it may be a misunderstanding because I have very little to do with VAT. (Tax men are actually very nice, but VAT is administered by the OTHER nice taxing department!) So do not rely on what I say without checking it out with somebody who DOES know about it.


-- Posted by SaraG  on Oct. 2, 2001

I think the point here is that the test case that Janet refers to has shown that provision of livery services that are linked to provision of a stable are now VAT exempt. In theory, there is now no reason for  livery owners to charge VAT, though most will be very reluctant to do all the paperwork to reclaim and then pay back VAT.

However, I suspect that Janet is right and many livery yards do not know about this change - it is not that common knowledge as Alison's answer shows - which describes the position before this test case perfectly. HM Customs and Excise are hardly going to make a big song and dance about it if it means that their revenue will go down.  I'm also unsure of how a VAT registered livery yard would go about changing their status - probably more paperwork.

Why not print off a copy of the article and take it along to show to your livery owner? If s/he doesn't know about it, you could suggest that it would be a good idea for her/him to talk to their accountant. If they do know about it and aren't prepared to do anything - it's then down to your powers of persuasion.

-- Posted by Trezara  on Oct. 2, 2001

Thanks for your replies!  

The way I very basically understand it is that due to the case of John Window v The Commissioners of Customs & Excise (you can get it off lawtel), my riding horse who has her own allocated stable can be exempt, if the owner of the yard chooses to do this, but my youngster who lives as part of the 'herd' with the yard owners horses, cannot as she does not have her own allocated space.

I provided yard owners with copy of case, neatly highlighted in places in addition to articles from Horse and Hound and she said she would look into it.

I love this yard but the extra 100 a month is galling!



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