Clubs and associations: hunts
Hunting (typically drag hunting where the hounds follow an artificial scent known as the drag) is carried on by local hunts. These are typically based on geographical areas within counties or on particular towns or villages. Hunting live animals with hounds (particularly fox hunting, but also the hunting of deer, hares and mink and organised hare coursing) was made unlawful from 18 February 2005 in England and Wales by the passing of the Hunting Act 2004. Hunting live animals was banned in Scotland in 2002. However, it remains legal in Northern Ireland.
Each hunt has a hunt committee. The committee appoints a Master of Foxhounds (sometimes joint Masters). The Master is responsible for:
- the breeding, keeping and training of the hounds; and
- other organisational services delegated to them by the hunt committee.
The Master of Foxhounds
The Master is often a farmer or landowner. They may be registered for VAT in that capacity. However, their hunting activities are not regarded as constituting a business or part of a business.
The Master does not charge the Committee for their services. They will often receive a ‘guarantee’ by which the Committee agrees to reimburse their annual expenses up to a stated amount. Often the Master will further subsidise the Committee from their private means. The guarantee is not consideration for any supply in the course or furtherance of any business.
Tax charged on goods and services the Master buys in connection with hunting is not input tax. It is therefore not deductible.
Tax incurred on goods and services used both in the Master’s own business, for example farming, and for hunting should be apportioned to exclude the hunting element.
Subject to the normal rules the VAT paid on goods and services ordered by the Master:
- on behalf of the hunt committee; and
- paid for out of committee funds
is the hunt’s input tax. Full guidance on input tax is provided in VAT Input Tax VIT VAT Input Tax VIT20000.
The hunt or hunt committee - activities and VAT consequences
Each hunt has members who pay annual subscriptions. Facilities of membership are made available for a subscription or other consideration. The Committee is deemed to be carrying on a business under section 94(2)(a) of the VAT Act 1994. It is therefore liable to register, subject to the registration limits.
a. Payments by farmers or landowners to the hunt
Hunt committees should account for tax on:
- the actual amount contributed by each farmer or landowner; or
- on 70% of the normal annual subscription
whichever is the less.
b. Field money and visitor’s cap money
Field money is an obligatory payment by members or farmers hunting on any particular day. It is fixed by the hunt committee in much the same way that a squash club asks members to pay a court fee when they want to play. Field money, subject to the hunt complying with the ‘eligible body’ conditions, will be exempt under the sporting services exemption in Item 3 of Group 10 Schedule 9 of the VAT Act 1994.
Cap money is a charge for a day’s hunting to a non-member on the same lines as a green fee charged by a golf club. VAT must be accounted for on the receipt of visitors’ cap money.
c. Hunt balls and other social events
Income from these events, for example ticket sales, admission charges and bar takings, represents income from taxable supplies. It is standard-rated.
There have, however, been disputes over who is liable to account for the tax on that income.
Hunts must include hunter trials, hunt balls, and other social events as part of the taxable activities of the hunt for VAT registration and VAT liability purposes.
It follows from this that input tax may be deducted, subject to the normal rules, for:
- expenses incurred on social activities; or
- where goods and services are ordered in the name of the hunt committee and paid for out of hunt funds.
However, HMRC accepts that both supporters clubs and point-to-point activities are separate from those of an individual hunt and need not be aggregated together for VAT purposes. The relevant supporters or organisers must register in the normal way if the taxable turnover arising from these activities exceeds the VAT registration threshold.
Any occasions where the Master of Foxhounds or a hunt operates differently from the description above should be referred by HMRC staff to the VAT Advisory Team. Once approved by the HMRC line manager the submission should be sent via EF to the VAT Advisory Team in line with the guidance set out in Indirect Tax – Getting advice about VAT and IPT.