MATT Mitchell, chief executive of Tattersalls Ireland, wants the racing industry to make a united approach to the Government over this week’s VAT increase on racehorse purchases.

Having been as low as 4% just four years ago, the VAT rate will be 13.5% from January 1st and Mitchell believes it will have a significant impact on buyer behaviour.

The new rate will only be charged when the buyer is the ‘end user’ or intended racehorse owner. It won’t apply to breeding stock sales or transactions where the buyer is a trader or producer of young stock. Owners can also avoid VAT if they plan to put the horse in training outside of Ireland.

While there is a VAT rate of 20% payable to the British tax man if the racehorse is moved there, this can be reclaimed if the owner signs up to the 25-year-old BHA/Weatherbys VAT registration scheme. By signing up and allowing their jockey to carry sponsorship, owners in Britain are allowed claim back VAT.

Mitchell said: “The VAT increase is a big concern to us, and more so to Irish trainers who appear to have been put at a disadvantage.

“On one hand the Government is telling Irish racing to go and find new racehorse owners and here you have a tax which will drive them away.”

Henry Beeby, CEO of the Goffs Group, said: “It’s disappointing. This was supposed to be a Brexit-proof Budget but they have managed to put Ireland at a massive disadvantage. We estimate that €20 million of our annual turnover will be affected by the new rate. Yes, we are coming off the back of a record-breaking sale but virtually all of the buyers were international. The shortage of domestic demand may become far more apparent later in the year.”

PROTECTION

Beeby was involved in setting up the VAT registration scheme for racehorse owners in Britain in the 1990s. “It should not be seen as a tax-break for racehorse owners. It is putting us on a level-playing field and protecting a major industry.

“It works in Britain and it can work here too.”

Shane O’Dwyer, CEO of the Irish Thoroughbred Breeders’ Association, said most of its members were ‘flat rate farmers’ who can claim back most of their VAT expenditure. But he acknowledged that the 13.5% VAT rate would ultimately lead to lower demand and lower prices for Irish bloodstock.

“It’s not a good move with Brexit looming,” he said. “Racing has a good case to make for a concession but it will have to be based on case studies such as syndicates of ordinary investors who come together to speculate up to €100,000 on a group yearlings to put in training here and sell on. That kind of owner could be lost.”