GOFFS, Tattersalls Ireland and the Association of Irish Racehorse Owners are backing Horse Racing Ireland’s appeal to the Government to allow racehorse owners claim back VAT paid on horse purchases and training fees.

The vast majority of racehorse owners are forced to pay 9% VAT when they buy a horse at public auction. The rate was raised from 4.8% two years ago following a complaint lodged with the European Union that the Irish market had an unfair advantage.

However, the industry believes the tide has now turned against Ireland, with owners in Britain and France allowed to reclaim their VAT outlay through self-help schemes.

Since 1993 British owners, with the help of the British Horseracing Authority and Weatherbys, have been able to claim back the 20% VAT on racehorse purchases and training fees, once they can demonstrate a commercial aspect to the investment.

This is typically done by simply placing a company logo on the jockey’s silks.

Now HRI has asked the Department of Finance to facilitate a similar scheme here.

Confirming the approach, HRI chief executive Brian Kavanagh said: “This issue will become even more relevant in a post-Brexit environment.”

Goffs CEO Henry Beeby welcomed the news: “The Irish are disadvantaged at present and I speak with a degree of knowledge having been involved in the introduction of the UK scheme in ’93. The majority of owners in Britain are availing of this and it certainly had a major positive impact on bloodstock prices.”

There is a loophole in Irish tax law which allows farmers to claim back 5.4% of any VAT-rated expenditure. Racehorse owners who meet Revenue’s definition of a farmer can use this ‘flat rate addition’ clause to claim back most of the VAT on horse purchases.

“But I know of at least one major racehorse owner who has reduced his spending at Irish bloodstock sales since the VAT rate was increased as he cannot claim any of it back,” said Beeby. “There is plenty of anecdotal evidence that business people would be more inclined to have a horse in training if they could claim back the VAT.”

Roger Casey, managing director of Tattersalls Ireland, said: “While the wider implications of any VAT recovery scheme do need to be fully assessed and understood, clearly any initiatives that encourage ownership and increased investment in bloodstock in Ireland should be welcomed.

competitive disadvantage

“The existing rules continue to put our racing and breeding sectors at a competitive disadvantage at a time when we are trying to understand and adjust to the potential issues arising with regard to Brexit, so in principle anything which promotes horse ownership in Ireland and may help to level the playing field will naturally benefit the entire bloodstock industry and should be supported.”

The Association of Irish Racehorse Owners is also supportive. Its manager Aiden Burns said: “We made representations to HRI in relation to this when the VAT rate was raised to 9%.”

Kilkenny accountant and racehorse owner John Fleming has no doubt that a VAT registration scheme here would boost the bloodstock market. “It’s very easily implemented. In Britain if an owner does not have a company of their own to promote on their silks they can sign up to either the SIS or Tattersalls scheme. All you have to do is to show you are seeking a sponsorship opportunity.”

However, Fleming sees one potential drawback for Irish trainers. “Most Irish trainers are not VAT registered, as long as their turnover is below a certain figure. That exemption could be lost if the scheme is introduced here but that can all be sorted out later.”