Selling horses and ponies if you use a VAT margin scheme
If you sell horses or ponies in the UK, find out how to use a margin scheme to account for VAT (VAT Notice 718).
There are different rules if you sell second-hand horses and ponies under a margin scheme.
When you can use a margin scheme
Horses and ponies must be second-hand to be eligible for a margin scheme.
A second-hand horse or pony is one that has previously been owned by somebody else.
When you cannot use a margin scheme
You cannot use a margin scheme if:
- you bred the horse yourself and are selling it for the first time, as it is not classed as second-hand
- the VAT is shown separately on the purchase invoice for a horse or pony you have bought
How to work out the margin and VAT due
You should:
- work out the purchase price and selling price
- take away the purchase price from the selling price to work out the gross margin
- multiply the gross margin by 1/6
The VAT due is the difference between what you paid for the horse or pony and what you sold them for, not the overall profit you have made on them.
Purchase price
The purchase price is everything you pay for the horse or pony and follows the same rules as the selling price.
Selling price
The selling price is everything you receive for the horse or pony, whether from the buyer or a third party, including incidental expenses directly linked to the sale.
If you use an agent
If you use an agent, how they charge their services to you will affect your final selling price.
They will either:
- retain a percentage of the selling price
- make a separate charge to you
You should check with your agent to make sure you are calculating your selling price in the correct way.
Records you should keep
There are 2 ways you can account for VAT.
You can either:
- keep normal margin scheme records
- use the British Equestrian Trade Association (BETA) form
The BETA form has 3 parts:
- part A, your stock record
- part B, your copy sales invoice
- part C, your customer’s purchase invoice
It has all the stock and sales records you need to keep for a margin scheme. You do not need to keep a stockbook or invoices.
You can buy the BETA form from the British Equestrian Trade Association (BETA). You should use one form for each horse or pony you buy or sell under a margin scheme.
You must not alter the serial number on the form.
If you do not complete the form correctly, HMRC will not be able to confirm the margin you have achieved and you’ll have to account for VAT on the full selling price.
Buying using the BETA form
Step 1
Complete the ‘description’ and ‘written description’ sections of parts A, B and C of the form.
You must follow the standard laid down by the Royal College of Veterinary Surgeons (RCVS) in the booklet ‘Verification of horses: instructions for veterinary surgeons’.
You can buy a copy online or write to:
Bettrends Shop
Sanders Road
Wellingborough
Northants
NN8 4BX
Step 2
Write the unique identifying number of the horse’s passport in the space for ‘reg no’.
If the horse or pony does not have a passport, you and a vet must sign parts A, B and C of the form to certify that the horse or pony is the one described on the form.
If the purchase price of the horse or pony is £500 or less, you do not need the vet’s signature.
Step 3
Give the form a stock number in numerical sequence.
Step 4
Complete the ‘purchase record’ section on the reverse of part A.
Step 5
Keep all 3 parts of the form. You’ll need them when you resell the horse or pony.
Buying from someone who is selling under a margin scheme
You should follow the steps for buying using the BETA form
If the seller is using the BETA form:
- they will give you part C of their form for you to keep with your own partially-completed form
- they will not need to sign the declaration on the reverse of part A
- if the horse or pony does not have a passport and has a purchase price of £500 or more, the part C you’re given should already have been signed by a vet — you need to copy these details on to your form but you do not need the vet to sign it
Buying at auction using the BETA form
You should follow the steps for buying using the BETA form
The auctioneer should also give you part C of the seller’s form for you to keep with your own partially completed form.
You must get the auctioneer to complete the reverse of part A of your form with their:
- name
- address
- lot number
Selling using the BETA form
Step 1
Check that the horse or pony is eligible to be sold under a margin scheme.
Step 2
Check that you followed the steps when you bought the horse or pony. If you have not, you cannot use the BETA form when you sell the horse or pony.
Step 3
Complete the sales record sections on the reverse of parts A, B and C.
Step 4
Complete the VAT record section on the reverse of part A.
Step 5
Keep parts A and B.
Step 6
Give part C to the buyer.
Step 7
Complete the VAT summary sheet.
If you do not use the BETA form
If you are keeping normal VAT records, you must include enough information in your stockbook to identify the horse or pony, such as:
- unique identifying passport number
- colour
- sex
- type or breed, for example, cob or thoroughbred
- age, if known
- height
- stable name, if known
- distinctive markings
If you are selling a horse or pony at auction
You should follow the steps for selling using the BETA form
At the auction you should also:
- tell the auctioneer that your horse or pony is being sold under a margin scheme
- give the auctioneer completed parts B and C of your form
After the sale:
- the auctioneer will complete the sales details on the reverse of parts B and C, adding their name and address
- the buyer will get part C
- you’ll receive part B
- you should complete the sales and VAT records sections on part A of your form
Further information
You must show any goods you buy or sell using a margin scheme on your VAT return.