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HMRC internal manual

VAT Margin Schemes

Horses and ponies

What this section is for

Although there is no separate scheme dealing specifically with horses and ponies, there are different record-keeping requirements which must be met. This section contains additional information and should be read in conjunction with VATMARG02000 to VATMARG07000 as appropriate.

What animals are eligible for the scheme?

The margin scheme can only be used for second-hand horses and ponies. Horses and ponies which have been bred and are being sold for the first time are not second-hand and are not eligible for the margin scheme. However, the auctioneers’ scheme can be used for the sale of such animals on behalf of non-taxable persons. (VATMARG04350 details the conditions which must be met).

The schemes cannot be used for any horse or pony purchased on a tax invoice.

What records and accounts must be kept when selling horses and ponies?

Notice 718 The VAT Margin Scheme and global accounting describes fully the record keeping requirements to be met when buying and selling horses and ponies under the margin scheme.

Choice of record-keeping requirements

There are two record-keeping options for dealers in second-hand horses and ponies. They can choose to use either

  • the normal record-keeping requirements detailed in Notice 718, or
  • the special three-part forms in numbered sets sold by the British Equestrian Trade Association (BETA). If the forms are used there is no need to keep a stock book or invoices.

If the trader chooses to keep normal margin scheme records instead of the three-part form, he must include sufficient details in his stock book to identify the horse or pony including:

  • unique identifying passport number
  • colour;
  • sex;
  • type or breed (e.g. cob or thoroughbred);
  • age (if known);
  • height;
  • stable name (if known); and
  • distinctive markings.

This requirement has the force of law.

Reconstruction of records for horses and ponies

Dealers who have not kept the correct records for using the scheme cannot be allowed to reconstruct records using the three-part form unless the “description” and “written description” sections of parts A and B of the three-part form can be completed and, when necessary, certified by a vet (see Notice 718).

However, if the trader has chosen to keep normal margin scheme records, reconstruction may be possible.