Horsebox owners warned to check tax obligations [H&H VIP]

Horsebox owners dishonestly claiming vehicles as company expenses could be being investigated for tax evasion by HMRC, warns national accountancy group, UHY Hacker Young.

The company believes that HMRC suspects some farmers and rural business owners of buying horseboxes through their company — either falsely claiming the cost as a business expense for tax purposes, or failing to declare their personal use of the horsebox and paying tax on it as a “benefit in kind”.

But when H&H spoke to the HMRC it refuted the claims.

“There is no HMRC crackdown on the use of horseboxes by farmers,” said Patrick O’Brian, a spokesman for HMRC.

However, UHY Hacker Young said the HMRC’s powerful new computer system, Connect, means that officials can identify discrepancies between an individual or company’s official tax records and information from multiple third-party sources.

The company said HMRC uses DVLA databases and even Google Street View to monitor the lifestyles of suspected tax evaders.

“Underpaid tax relating to horseboxes is a drop in the ocean, but HMRC seems to be focusing attention in this area because they can now be such valuable assets,” said Charles Homan, partner at UHY Hacker Young.

“Without the correct documentation, even owners of horseboxes who have done nothing wrong could find themselves on the receiving end of a lengthy and uncomfortable tax investigation,” he added.

He said “it is vital” farmers or rural business keep records “to demonstrate that any vehicle purchased through a company is being used legitimately, and not simply providing them with an impressive way to get to their local point-to-point.”

Also, some horsebox owners may not realise that tax charges apply on income from the sale of a vehicle, warns Mr Homan.

“Where an individual is selling regularly online or making a significant profit on items, income or capital gains tax charges may apply,” he said.

“Similarly, companies need to report proceeds from the sale of an asset like a horsebox, for capital allowances and corporation tax purposes.

“HMRC is taking a much tougher stance on this form of tax evasion. Individuals and businesses must ensure that income from all sources is declared properly,” he warned.

Jon Phillips, who runs the Organisation of Horsebox and Trailer Owners, added: “Horsebox owners who are running a lorry on their company must be able to prove it is beneficial to the turnover of their business, or they may face investigations by HMRC.

“They must be able to prove there is no personal gain from running a lorry on the business.”

Ref: Horse & Hound; 22 January 2015

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