The very significant benefits to Racing, Breeding and Government of the VAT Registration Scheme for Racehorse Owners are set out clearly in a new report commissioned by BHB.
The study, by leading consultants KPMG, draws attention to the great success of the Scheme in generating new business income for racehorse ownership and in contributing to an upturn in key industry trends. As Racing and Breeding prepare for Government’s review of the Scheme, the study also forecasts the negative impact on employment and Government revenues if the Scheme were to be withdrawn.
Among the report’s conclusions are that withdrawal of the Scheme would result in:
A fall in horses in training of up to 13%, leading to a substantial decline in, inter alia, betting turnover and betting taxation revenue
Over 1,100 jobs in training yards and some 1,500 jobs in breeding and bloodstock sales being put at risk, with consequent damage to the rural economy
The relocation to other countries, particularly Ireland and France, of high-quality horses in training and bloodstock
The report also shows that the annual cost of the Scheme to Customs & Excise, some £15m, would, if it was withdrawn, be outweighed by the consequent costs to Government in areas such as lost income tax, National Insurance, corporation tax and betting duty. These could be as much as £24.5m a year.
The VAT Scheme was introduced in 1993 and renewed with minor modifications in 1997. It enables owners to offset VAT charged on costs incurred in the course of their racing activities against VAT on income from sponsorship, appearance money, horse sales, prize money and other business sources. Customs & Excise are to review the Scheme again later this year and are expected to issue a Consultation Paper in the autumn. Racing and Breeding’s response will be co-ordinated by BHB which, in preparation, set up a specialist Group last year.
Lord Donoughue, Chairman of BHB’s VAT Registration Working Group, said: “It is vital for the long-term health and international competitiveness of British Racing and Breeding that the VAT Scheme continues. The Scheme is of benefit not just to our industry but also to Government, which would itself suffer if the Scheme was lost. The KPMG report will be an important contributor to BHB’s response to the Consultation Paper, when published.”
For further information, please contact Alan Delmonte, BHB Communications Manager, on 020 7343 3318. Copies of the report can be obtained from Alan Delmonte or Richard Hayler (020 7343 3335) and it will be available on BHB’s website from Wednesday afternoon.