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HMRC internal manual

VAT Business/Non-Business Manual

From
HM Revenue & Customs
Updated
, see all updates

VAT registration scheme for racehorse owners: jockeys

 

Licences

Under the rules of racing a jockey must get a licence from the Jockey Club. This applies to both flat and national hunt racing.

Categories of jockey

The categories of jockeys are:

  • professional;
  • apprentice;
  • conditional; and
  • amateur.

A jockey’s main income comes from riding fees and a percentage of prize money. Flat racing attracts higher prize money and higher retainer payments from leading owners and stables who want to have first call on that jockey’s services. National Hunt racing attracts a higher fee per ride because of the higher risk of injury to a jockey racing over obstacles.

Under the Rules of Racing a jockey may not own a racehorse in training. Where a jockey is involved in breeding, and these activities are carried out predominantly with a view to making sales, they may be accepted as forming part of the jockey’s business for VAT purposes.

Riding fees

A jockey receives a set fee for each ride within the UK. A self-billing invoice and monthly statement detailing all rides and prize money is issued by Weatherbys to each jockey. Statements are consecutively numbered and issued for the period January to December.

Retainer/work riding fees

The principal trainers and owners retain a jockey. The standard contract requires a jockey to be available to ride any horse owned by their patron. For riding services within the UK this is a standard rated supply. If a jockey rides work for a trainer (which means exercising or schooling a horse on the trainer’s gallops or elsewhere) any payment they receive is taxable at the standard rate.

Prize money

Under the Rules of Racing a percentage of the prize money is paid to the jockey. In the UK this is paid through Weatherbys. These receipts are outside the scope of VAT.

However, as part of an agreement for supplying their services, a jockey may receive a percentage higher than that provided for under the Rules of Racing. This extra payment is taxable at the standard rate. Any payment received for riding a horse abroad is outside the scope of VAT.

Apprentices and conditional jockeys

Inexperienced jockeys are known as apprentices in flat racing and conditional jockeys in National Hunt racing. Apprentices and conditional jockeys are employees of the trainer. Apprentices lose their apprentice status at 25 years of age, conditional jockeys at age 26 no matter how many races they have taken part in or winners they have ridden.

When they ride against full professional jockeys they are allowed to claim weight off that allocated to their horse to compensate for their inexperience. Horses must carry at least 7 stones 10 pounds in a flat race or 10 stones in a National Hunt race.

The least experienced jockeys can claim seven pounds off their horse’s allocated weight (ten pounds if a conditional jockey is riding a horse from his employing trainer’s stable and has not yet ridden five winners), those with slightly more experience five pounds, and those who are nearly as experienced as fully fledged jockeys three pounds. An inexperienced jockey is often referred to as a claimer (or an ‘x pound’ claimer) because of their allowance. Experience usually is determined by the number of winners a jockey has ridden.

Each time they ride in a race a riding fee including VAT is payable by the owner. In the case of apprentice jockeys, and conditional jockeys who claim a seven or ten pound allowance, one-half of the riding fee (including the VAT) is paid to the jockey, with the balance paid to the trainer who should account for VAT on the full amount of the riding fee.

For conditional jockeys who claim a five or three pound allowance, and those who have lost the right to claim an allowance, the whole of the riding fee excluding VAT is paid to the jockey. Only the VAT is paid to the trainer who should declare it as output tax. The details of these transactions are shown on self-billing invoices issued by Weatherbys.

This treatment was considered and confirmed by the High Court in Hodges (RJ&AS) (VBNB75800).

Sponsorship and appearance money

Taxable supplies by jockeys may include:

  • branding opportunities on riding breeches or clothing;
  • receiving the free lease of a vehicle displaying a sponsor’s logo;
  • payment for appearing at a social event connected with racing;
  • payment for a newspaper article, book or television/radio interview.

The racing authorities allow jockeys to enter into their own sponsorship agreements and this may lead to the making of further taxable supplies.

To date there has been no record of a jockey receiving appearance money for riding at a particular race meeting in the UK.