Enter Your E-mail

Julie Butler, FCA, considers whether the game shooting industry may be under attack from HM Revenue & Customs.

Game shooting under attack?

Has the arrival of convenience shooting brought with it a close inspection by the Inland Revenue and Customs and Excise now known as HMRC?  Is the game-shooting industry under attack from the taxman?  There is a special Norwich ‘hit team’ (yes pun intended!) which has set up a special drive (please don’t think driven grouse) to collect all of the extra “tax take” and now it has expanded nationwide.  The chief ‘hitman’ John Spelling says that it has achieved an extra VAT collection of approximately £19,000 a visit - this would cause some small shoots to cease operation.

The essence of shooting is not just the question of whether the Shoot is compliant with HMRC, but whether the relationship between man and the countryside is in accord.  Sadly the element of “convenience” has come to the fore - guns arriving by helicopter on the day to shoot large bags may make no sense to the country men, but represent a large additional to HMRC take by the VAT man.  However, Shoot managers have to smell the coffee, not just the whiskey to understand what is really needed.

Points to note

What are the ‘VAT bullet points’ shoot organisers should be aware of?

• Small ‘private’ shoots with income of over £64,000 (the registration limit for 2007/08) not achieving the non-commercial criteria and failing to register for VAT and possibly collecting large amounts of VAT penalties as a result.
• VAT registered farmers/landowners running the shoot as part of the farm but not charging VAT on the shoot income.
• Farmer/landowner leasing the shooting rights (and possibly other services) to a syndicate in return for a few days shooting.  The “right to take game” is subject to a VAT charge. The landowner should charge output VAT on the Shoot income. The landowner should charge VAT on the supply of shooting rights and possibly the supply of the services of a gamekeeper, even if no money changes hands, i.e. Barter of the supply of shooting rights in return for a few days shooting.

The sale of dead game to the guns is a zero-rated VAT supply as it is a food supply.  There are arguments to support the charge for the shooting rights being divided between the zero-rated for VAT lease of land and the standard rated VAT supply of the “right to take game”.

Action for shoot managers

What action should the Shoot managers take?  Clearly, professional advice should be sought, perhaps assess the ‘code of good shooting VAT practice’ for each and every Shoot operation before the VAT man does, i.e. establish the exact legal structure of the Shoot and ensure everything tallies?  For example, the VAT officers are looking for the artificial separation of businesses as a way that they consider the shooting industry might look at avoiding charging VAT.  However, these business divisions are often very genuine, with for example the landowner trading in the main farm activity and the shoot being run by the farmer, his wife and perhaps some children and the activity is genuinely below the VAT registration limit.  If this is the case then the Shoot should try and ensure that the Shoot website, literature, accounting records and facts of how the Shoot is run all ‘sing the same song’.  A confused mix of detail just gives the VAT Inspector weakness to attack and opportunities to collect more.  In the combined Tax and VAT newsletter, of what was previously known as the tax office and Customs and Excise, ‘One HMRC’ it stated game-shooting has a turnover of £1.6 billion per annum and employs a 70,000 workforce.

If you are a member of a shooting syndicate and you are worried that the manager (whilst providing high flying birds, wonderful sport, and great hospitality) perhaps neglects the paperwork from time to time then possibly it is worth looking just a little deeper at the VAT compliance.

It is accepted that the prime objectives of the landowner and Shoot manager are no doubt the land management, the consideration of the habitat and the vermin control arising from comprehensive keepering but VAT compliance is an objective needing due consideration.