New ruling on VAT is good news for livery yard owners. . . and clients
Owners of horses kept at livery who have been paying VAT may be in line for a windfall payment, since Customs & Excise confirmed it has adopted a new policy on horse livery.
Livery yard owners will now be able to claim VAT back from Customs & Excise, but the money must be passed on to horse owners.
Previously, stabling and livery was treated asa single service subject to VAT, but the decision in a recent tribunal case has changed the view of Customs & Excise.
The John Window tribunal case found that the principal element of livery was the stabling, which is in most cases exempt as box rent. The additional services supplied with stabling, which turn it into livery, are therefore effectively ancillary to that main element and must also be VAT exempt.
As a consequence, Customs & Excise has stated that: “If you supply stabling and livery services together as a single supply then they are exempt from VAT.”
The department’s statement makes a distinction between livery yards and “special purpose stables”, i.e. those that specialise in the training of racehorses or in breaking-in and schooling. These continue to be standard-rated, since the supply of a stable is not the predominant element of the transaction.
The new ruling became compulsory on 1 January 2002, and livery yards will have the option of claiming back VAT charged over the past three years, although Customs & Excise can insist that this is paid back to the horse owners.