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Customs have explained how they will implement the tribunal decision on the VAT liability of stabling and livery services supplied together, which was discussed by Jeremy de Souza in Taxation, 29 November 2001 at page 226. Their previous policy was that the supply of livery services in conjunction with the exempt supply of stabling was a single standard-rated supply. The tribunal found that the stabling was the principal element of the supply and that the livery services were ancillary to it. There was therefore a single exempt supply.
Customs have explained how they will implement the tribunal decision on the VAT liability of stabling and livery services supplied together, which was discussed by Jeremy de Souza in Taxation, 29 November 2001 at page 226. Their previous policy was that the supply of livery services in conjunction with the exempt supply of stabling was a single standard-rated supply. The tribunal found that the stabling was the principal element of the supply and that the livery services were ancillary to it. There was therefore a single exempt supply.
So businesses which supply stabling and livery services together as a single supply, subject to the following paragraphs, are exempt from VAT.
Livery services are provided for horses in a stable that go beyond the right to occupy the stable. They may include feeding and watering, mucking out, turning out, worming, clipping, plaiting, exercising, cleaning tack, grooming, breaking in, schooling and arranging for vets. It does not include clearly identifiable separate supplies such as vets services.
If a horse owner rents stabling then, provided that owner has exclusive use of the stabling, this is a supply of a right over land, which is exempt unless the option to tax has been exercised. If a supply of a right over land is not made, the supply will be standard rated.
The tribunal decision does not affect the liability of the supplies made by racehorse trainers and stud farm owners or stables that specialise, for example, in breaking in and schooling. The principal supply in these circumstances is not the supply of the right to occupy a stable. The liability of the supply of the keep of animals is also unaffected, and remains standard rated. The guidance relating to grazing contained in paragraph 10(b) of Notice 701/15 is unaffected by the decision.
Where under the foregoing guidance there is a single exempt supply, the change must be applied from 1 January 2002. VAT that has been previously charged for such supplies is eligible to be refunded subject to the three year cap and the unjust enrichment provisions.
(Source: Customs Business Brief 21/01 dated 21 December 2001.)
