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HMRC internal manual

VAT Business/Non-Business Manual

VAT registration scheme for racehorse owners: racehorse trainers


Liability of trainer’s fees

A trainer who has a licence to train horses owned by unconnected persons is making standard rated supplies of training in the course and furtherance of a business.

Trainers who own a part share in a racehorse (racing partnerships)

If the racing partnership registers for VAT the trainer must join the partnership. A trainer cannot recover any input tax through the VAT registration covering the training activities. It is possible for a trainer to be a partner in several registrations.

A trainer is entitled to invoice a partnership, or indeed anyone, for training fees at any level they choose. Where a trainer:

  • owns a part share of a racehorse in their yard; and
  • the partnership is registered for VAT

the invoice issued need only represent the respective training costs to the other partners. Therefore if the trainer owns 25% of the racehorse the partnership need only be issued with an invoice for 75% of cost.

Prize money

Under the Rules of Racing a percentage of the prize money is paid to the trainer. These receipts are outside the scope of VAT.

However, as part of an agreement for supplying their services they may receive an additional percentage above that allowed under the Rules of Racing. This extra amount is taxable.

Prize money received for a horse racing abroad is outside the scope of VAT.

Gifts received by trainers

These may consist of monetary payments, stallion shares, annual breeding rights or simply goods.

  • A monetary payment, unless due under a written contract, is outside the scope of VAT.
  • The receipt of a stallion share is taxable. So is an annual nomination. Output tax is due on the open market value. In practice only the most successful trainers receive shares.
  • An annual breeding right (ABR) allows the holder to nominate a mare to be covered annually by the stallion. It does not enjoy the same benefits as a share for it cannot be sold or transferred. An ABR is usually non-monetary consideration for the trainer’s services and is taxable. The value is based on an agreed market value.

Trainer’s overseas expenses

It is quite common for UK based horses to race in both the EC and non EC countries.

It is the responsibility of the trainer to arrange the transportation and keep of the horses whilst abroad. This means that the stable lads and normally the trainer and the stable’s retained jockey (if appropriate) will accompany the horse.

Travelling and accommodation expenses for the stable lads and jockey are part of the consideration for the supply of the trainer’s services to the owner, and are taxable.

Expenses incurred by a jockey who is not retained by the stable do not form part of the supply. This is because the riding services are considered to be a separate supply, being performed outside the UK.