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Q: I run a livery yard, and my business is suffering as I have to charge VAT on full liveries. There is little input VAT [VAT on expenses] I can reclaim, as the majority of my costs are attributable to wages, feed and rent.

I understand that I may be out of the scope of VAT and need not be VAT-registered — is that correct?
CD, Northants

According to HM Revenue and Customs, the definition of business for VAT purposes is governed by specific rules and regulations.

These address issues such as business work, as opposed to “daily enjoyment”, and work that has “recognisable continuity”, as opposed to ad hoc work.

When should VAT be charged?

Certain DIY livery services are outside the scope of VAT, therefore no VAT is charged and no input VAT can be reclaimed.

“Regulations state that VAT exemption extends to full livery services,” explained Julie Butler of Hampshire chartered accountants Butler & Co.

“A livery business with turnover in excess of the VAT registration limit of £68,000 does not need to be registered, nor does it have to charge VAT. You may not therefore have to charge VAT on full liveries.”

Are there exemptions?

“If the livery business is in isolation to another business, this can be extremely beneficial,” said Julie.

“However, where the livery business is part of a larger VAT-registered organisation, eg a farm or a riding school, there could be problems of partial exemption for VAT, through a complicated system of disallowing input VAT.

“The reality is, there are lots of opportunities for livery providers not to charge VAT to private customers, which is a real advantage in the credit crunch.”

According to Julie, VAT on liveries is a complicated subject and you should seek advice from a specialist chartered accountant.


Butler & Co, tel: 01489 896996

This Q&A was first published in Horse & Hound (30 July, ’09)

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