HMRC has got the bit between its teeth over purchases of luxury high-end horse boxes amid concerns that some buyers are avoiding tax by failing to pay the correct tax on equipment costing hundreds of thousands of pounds, according to research by UHY Hacker Young
HMRC suspects some farmers and rural business owners of buying horseboxes through their company, either falsely claiming the cost as a business expense for tax purposes, or failing to declare their personal use of the horsebox and paying tax on it as a ‘benefit in kind’, says UHY.
By drawing in data from multiple third party sources using its Connect investigation tool, HMRC can identify connections and discrepancies between an individual or company’s official tax records and information. UHY Hacker Young claims that HMRC is using DVLA databases and even Google Streetview to monitor the lifestyle of suspected tax evaders, including the movements of horse box owners.
Top of the range horse boxes such as the one Zara Philips used during the 2012 Olympics, which had capacity for six horses and its own bedroom, kitchen and living room complete with satellite television, can have an estimated value of up to £500,000.
Charles Homan, partner at UHY Hacker, said: ‘Underpaid tax relating to horseboxes is a drop in the ocean but HMRC seems to be focusing attention in this area because they can now be such valuable assets. It shows how determined HMRC are to close down every little loophole and capture every mistake made in tax returns.’
Horse box owners who do not want to fall at the first hurdle of a potential HMRC investigation are being urged to make sure they have the correct documentation to support their purchase and use of the equipment.
Homan said: ‘There are many reasons why a farming or rural business might need to use one of these horseboxes - they can be effective and useful multipurpose vehicles. But it is vital that they keep records to demonstrate that any vehicle purchased through a company is being used legitimately and not simply providing them with an impressive way to get to their local point-to-point race.’
He warned that anyone who regularly buys and sells horse boxes should take steps to ensure they are aware of all their tax liabilities, claiming that HMRC has been monitoring horseboxes listed for sale in the classified advertisements of country magazine, Horse & Hound.
‘Where an individual is selling regularly online or making a significant profit on items, income or capital gains tax charges may apply. Similarly, companies need to report proceeds from sale of an asset like a horsebox for capital allowances and corporation tax purposes,’ Homan said.
