Owning a horse often involves arranging stabling and livery services, which can have VAT consequences. In this blog post, we delve into the intricacies of VAT in relation to stables, livery services, grazing, and the option to tax. By exploring these key aspects, we aim to shed light on the potential VAT implications horse owners should be aware of.

Exploring VAT Treatment in Stabling and Livery Services:

Recently, I had a conversation with a client who had a dispute with the owner of their horse's stable. Consequently, the horse was relocated to a different stable where no livery services were provided. Instead, my client paid solely for stabling, assuming all the responsibilities of mucking out and grooming.

The Impact of the Option to Tax:

VAT treatment varies depending on whether the stable owners have opted to tax the land on which the stable is situated. In the case of the first stable where a dispute arose, my client paid for both the supply of land and additional services (livery). If the owners opted to tax, VAT applied to both the right to occupy the stable and the livery services. Conversely, if no option to tax existed, the entire supply, including the livery services, would be exempt from VAT.

VAT Treatment in Stables Providing Only Land Rights:

For the second stable, which solely provided the right to use the land, the VAT treatment likewise depended on the owner's choice to tax the land. In the absence of an option to tax, no VAT would be applicable on either the land or the livery.

The Role of Livery Services in VAT Treatment:

While it may seem that the presence of livery services has no influence on the VAT treatment, an option to tax remains the decisive factor. Nevertheless, there are additional points to consider. The aforementioned assumptions presume the allocation of a specific area in the stables for the horse. In cases where no dedicated area exists, and the horse can roam freely, the entire supply is subject to VAT at a rate of 20%.

Special Purpose Stables and VAT:

It is essential to determine whether the livery services provided by the first stable belonged to a "special purpose stable" category, such as race horse trainers, stud farms, or stables involved in schooling or breaking horses. If this was the case, the entire livery package would be subject to VAT at a rate of 20%, irrespective of whether there is an option to tax.

Examining Grazing Rights and VAT: 

According to HMRC's VAT Notice 701/15, grazing rights are zero-rated as animal feed. However, if animal feed is supplied as part of the care of animals, it becomes standard-rated. A historical Tribunal ruling from 1980 raises questions about HMRC's position. The ruling stated that when a taxpayer owned fields used for grazing their own animals and occasionally allowed others to utilize the fields for a weekly payment, the supply was standard-rated and not considered a zero-rated supply of animal feed or an exempt right to use land. This implies that grazing rights are subject to standard-rated VAT, even in the absence of care services.

Conclusion:

Navigating the VAT implications surrounding horse stabling, livery services, grazing, and the option to tax can be complex. Understanding the VAT treatment in these scenarios is crucial for horse owners and businesses involved in the equestrian industry. By clarifying these concepts, we hope to give individuals valuable insights to make informed decisions and ensure compliance with VAT regulations.