The scheme was introduced in March 1993, following an agreement with the Thoroughbred Horseracing and Breeding Industry.  Racehorse owners who meet the conditions can register for VAT and recover some of the VAT charged on their expenses as input tax.

The revised guidance has updated the first step towards registration, which now requires owners to obtain a VAT1 registration form from Gov.uk. This should be returned along with the requisite documentation from Weatherbys the company which has responsibility for racing services administration.

HMRC has also amended the contact address for queries, as well as the final two sections, ‘Putting things right’ and ‘How HMRC uses your information’.

As the guidance outlines, the VAT treatment of racehorse ownership is complex and there are special rules for those who own horses under sponsorship deals, or who can show they receive business income for example from appearance money or sponsored number cloths (SNC’s) from horseracing activities. There are also special arrangements for owners of point-to-point horses that qualify for racing in hunter chases.

Those covered by the scheme can recover as input tax the VAT charged on the purchase, training and upkeep of a racehorse and any overhead expenses used for the purpose of the business.

However, the guidance highlights special arrangements regarding any trophies the racehorse might win. Anyone who runs a business as a stud or trainer can recover the VAT charged on trophies which are displayed on the premises to promote the business and attract clients.

But if they claim input tax and subsequently put the trophy to a private use, for example by taking it home to be kept, they must account for output tax. Otherwise, VAT on trophies is not input tax and is not recoverable.

VAT Notice 700/67: registration scheme for racehorse owners is here.