HMRC is scrutinising taxpayers that it suspects are dishonestly claiming horseboxes worth hundreds of thousands of pounds as company expenses, according to our research.
HMRC suspects some farmers and rural business owners of buying horseboxes through their company, either falsely claiming the cost as a business expense for tax purposes, or failing to declare their personal use of the horsebox and paying tax on it as a “benefit in kind”.
We explain that horseboxes can now be very valuable assets. For example, the horsebox used by Zara Philips during the 2012 Olympics, with capacity for six horses and its own bedroom, kitchen and living room complete with satellite television, had an estimated value of £500,000.
We state that officials can now quickly identify connections and discrepancies between an individual or company’s official tax records and information from multiple third party sources via HMRC’s powerful computer system, Connect.
HMRC uses DVLA databases and even Google Streetview to monitor the lifestyle of suspected tax evaders.
Charles Homan, Partner comments: “Underpaid tax relating to horseboxes is a drop in the ocean but HMRC seems to be focussing attention in this area because they can now be such valuable assets.”
“It shows how determined HMRC are to close down every little loophole and capture every mistake made in tax returns.”
He adds: “Without the correct documentation, even owners of horseboxes who have done nothing wrong could find themselves on the receiving end of a lengthy and uncomfortable tax investigation.”
“There are many reasons why a farming or rural business might need to use one of these horseboxes- they can be effective and useful multipurpose vehicles. But it is vital that they keep records to demonstrate that any vehicle purchased through a company is being used legitimately and not simply providing them with an impressive way to get to their local point-to-point race.”
“This serves as a reminder that HMRC is not just targeting big ticket tax avoidance. They have the database and software tools needed to clamp down on people from all walks of life who may only be underpaying by small amounts, or even accidentally.”
Sale of horseboxes under surveillance
HMRC has also been monitoring horseboxes listed for sale in the classified advertisements of country magazine, Horse & Hound. We explain that some owners may not realise tax charges apply on income from sale of a vehicle.
Charles commented: “Where an individual is selling regularly online or making a significant profit on items, income or capital gains tax charges may apply.”
In September of this year, eBay trader John Woolfenden was jailed for evading charges of this nature. He had failed to pay tax on over £300,000 earned via online sales.
Charles adds: “Similarly, companies need to report proceeds from sale of an asset like a horsebox for capital allowances and corporation tax purposes.”
“HMRC is taking a much tougher stance on this form of tax evasion. Individuals and businesses must ensure that income from all sources is declared properly.”