Pony trekking and VAT
You may make a mix of standard rated, exempt and zero rated sales for VAT purposes.
You can recover the VAT incurred on taxable sales, that is, both standard rated and zero rated supplies.
Exempt supplies generally do not allow for the VAT incurred in making those supplies to be recovered.
Standard, exempt or zero rated?
The supply of trekking and hacking services or riding lessons attracts VAT at the standard rate, as do sales of items such as adult riding hats, clothing and footwear.
If you plan to offer stabling and livery services together as a single supply, then this is exempt for VAT purposes, provided that you allocate all, or an identifiable part of the stabling for the sole use of the horse owner. This is an exempt supply of a right over land and the exemption also applies to the livery services (such as feeding, mucking out, worming and grooming) that you provide as part of the service. (You do have an 'option to tax' your supplies - details are contained in VAT Notice 742A, Opting to tax land and buildings. You could then recover the VAT you incur in making those supplies.)
If you sell feed separately (for example to local horse owners with their own land and stabling) then this is zero rated for VAT purposes.
Paying VAT due
You will have to register for VAT if your taxable sales are likely to be above the current VAT threshold. You will then have to charge VAT on your standard rated sales at the standard rate - this is known as 'output tax'. You will be able to reclaim any VAT you pay on purchases - this is known as 'input tax'.
Every quarter you pay HM Revenue & Customs (HMRC) the difference between:
- all the output tax you have charged
- all the input tax you have paid on your purchases
Nearly all businesses have to pay their VAT bill electronically - for example by direct debit or online banking. HMRC allows you some time at the end of each quarter before you have to pay the VAT due. So, for example, the VAT due on sales made in months one, two and three would be paid at the end of month four. Your VAT return will show your payment deadline date.
Businesses that are having trouble making their VAT payments, or are worried that future payments will cause them problems, can ask for help from the HMRC Business Payment Support Service. If your business needs this financial assistance to tide it over, HMRC will look at your situation and discuss temporary options that could help out. These could include letting you make payments over a longer period and waiving late payment surcharges. To discuss payment problems with HMRC you can call the Business Payment Support Service Helpline on 0300 200 3835.
You can contact the VAT Helpline on 0300 200 3700 to request further guidance and helpful leaflets including VAT Notice 700/1, Should I be Registered for VAT? and Notice 701/15, Animals and Animal Food. VAT publications are also available on the Gov.uk website.
You will have estimated your monthly sales income. Now decide whether you must register for VAT. If so estimate the approximate amount of VAT that you will have to pay every quarter.
Making Tax Digital (MTD) for VAT
Under HMRC's Making Tax Digital initiative, VAT-registered businesses with taxable turnover above the VAT threshold must keep records digitally and use special software to submit their VAT returns. You can find out more about MTD on the Gov.uk website.
Alternative flat rate scheme
You might be interested in an optional flat rate scheme (FRS) for eligible small businesses. Under this scheme you continue to issue tax invoices to VAT registered customers, but the VAT payable every quarter is calculated as a percentage of your VAT-inclusive turnover. You apply the appropriate flat rate percentage for your type of business. This scheme cannot be used with the retail schemes, the margin scheme for secondhand goods or the cash accounting scheme. You can find full details of the FRS, who can use it, and the flat rate percentages in VAT Notice 733, Flat rate scheme for small businesses. It will help you to decide whether or not the scheme is suitable for you.