The Equine Business and the business plan
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is well known that it can be difficult to
be profitable with any business that involves horses. The
infrastructure costs are high and areas of
the sport are not as focussed on commercial gain as some other sports,
coverage, sponsorship, prize money etc.
there are profits to be made from a
well run equine business. A
business for example must always try and control costs below livery
a stud business must be able to sell stock over and above production
costs. That sounds
an over simplification but the
harsh reality is there must always be a focus on profit.
of the current areas of attack by HM
Revenue & Customs (HMRC) in their attempt to deny Business
(BPR) for Inheritance Tax (IHT) is to question commerciality.
In order to achieve BPR
there must not simply be
a business but a business carried on for commercial gain. In
the case of equine
business, for example,
there must be a profit or evidence that a profit would be achieved.
will be asked by HMRC about the
original business plan, the quality of the books and records and the,
PAYE application re staff etc. Good
record keeping is not just a requirement for income tax purposes but
supports a claim for Inheritance Tax (IHT).
has been said that there are three things
certain in life – death, taxes and that on the question of
will always ask for the original business plan. How
can it ever be proven that an unprofitable
business was to be of commercial design if there was no original
It is not enough
just to take in a few
liveries and hope there is a net profit.
essential part of both income tax and IHT
protection is that every proposed equine business has a business plan.
would be income tax losses (HMRC allow a stud has the first eleven
produce a profit) and in order to protect the claim against total
must be proof of commerciality. The ultimate test is that a formal
plan was produced to show a profit can be achieved and was compared to
results as they progress through the years. Obviously
the one point of greater importance
than the business plan, is a profit itself that always proves
About the Author
Article supplied by Julie
Butler F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire,
01962 735544. Email;
Julie Butler F.C.A. is the author of Tax
Farm and Land Diversification ISBN: 0754517691 (1st
ISBN: 0754522180 (2nd edition) and Equine
Tax Planning ISBN:
third edition of Tax
Planning For Farm and Land Diversification will be published
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Article Published/Sorted/Amended on Scopulus 2010-10-22 11:12:09 in Tax Articles