The demonstration of a significant rise in business income generated for the sport has underpinned Racing’s submissions to HM Revenue and Customs as part of Government’s planned review of the valuable VAT Scheme for Racehorse Owners.
A memorandum outlining both the continued success of the Scheme and the substantial benefits that it brings to Racing and Breeding, as well as to the wider economy, was last week presented by BHB to Government officials, accompanied by an independent report by leading consultants KPMG on the economic impact of the Scheme’s withdrawal.
The Scheme, which was introduced in 1993 and was renewed by Government in 1997 and 2002, allows racehorse owners to register for VAT once they have secured business income in the form of sponsorship, and then reclaim the VAT on their racing-related expenses.
The key features of the submission include:
· The value of Owner Sponsorship Contracts registered under the Scheme at Weatherbys rising from £3.2m in 2001 to a forecast £10.3m in 2005
· Total Business Income for the sport under the Scheme rising to a forecast £13.2m from £6.2m over the same period
· Growth in the percentage of horses in training covered by Sponsorship Contracts to 77% from 63% in 2001
The increased income is additional money generated by the sport’s participants and has not had a detrimental effect on other commercial activities within Racing. The value of race sponsorship, for instance, has increased by 13.7% since 2001.
BHB has also drawn attention to these gains being linked with its own increased level of monitoring and promotion of the Scheme: a full-time member of staff was appointed by BHB in December 2003 to review its management and regulation, and the number of Sponsorship Compliance Officers, and the scope of their duties at race meetings, has been increased.
Were the Scheme to be withdrawn, the KPMG report predicts:
· A fall of up to 25% in the number of horses in training
· Reduction of income to Racing and Breeding of between £140m and £575m
· The loss of between 4,050 and 10,100 jobs, with particular impact on the rural economy
· A decrease in tax revenues for the Government of between £11.4m and £86.5m
The development of BHB’s submissions was overseen by a VAT Working Group, comprised of senior Racing and Breeding Industry representatives. Its Chairman, Jeff Ennis MP, commented: “The Racing and Breeding Industry has been united in developing what I believe is a compelling case for the continuation of the VAT Scheme. The Scheme enables the Industry to help itself, which it has done, and this has contributed to British Racing maintaining its position as a world leader.”
BHB Marketing Director Chris John said: “The VAT Scheme’s impact on commercial decision-making has never been more evident and it is now generating more income to Racing and the economy than ever before. The sport has worked very hard to ensure that we are in the best possible position to illustrate the Scheme’s many benefits.”
Copies of the Memorandum and KPMG report are available on request from firstname.lastname@example.org.