HMRC galloping after horsebox owners, warns James Cowper Kreston

HMRC is stepping up its long-running campaign against tax evasion, focusing now on individuals and businesses owning horseboxes.

The campaign, says Thames Valley accountants James Cowper Kreston, follows recent campaigns against builder, plumbers, restaurateurs, and doctors and dentists.

Fiona Hawkins, a senior manager at James Cowper Kreston who acts for many rural and farming businesses, said: “This particular campaign is not necessarily designed to catch people that deliberately set out to mislead HMRC, yet horseboxes are expensive purchases and their use is often blurred between business and personal use.

“HMRC believes that tax revenues are not correctly being calculated and this is what it is seeking to address.”

Large equine businesses will make significant investment in horseboxes and are likely to already account for their use in the correct way.   It is, says Fiona, farming or rural businesses that perhaps mix business use with taking their children’s ponies to a weekend show that it will be looking for.

Fiona adds: “HMRC has increasing sophisticated IT systems and access to other government department, such as DVLA, to check on ownership.  It is not unknown for HMRC officials to use publically available software, such as Google’s Street View, to back up any suspicions.”

Whilst the tax payable to HMRC over the incorrect use might be relatively small, an HMRC investigation can be enormously time consuming and stressful.  They also have a habit of extending into other parts of a business, where further errors might be found.

Fiona Hawkins offers this advice to farming families and rural businesses that use or have access to a horsebox:

• Keep records of when used – this could simply be a paper diary of when and who used the horsebox;
• Ensure that records include estimated mileage and nature of use;
• Tell your accountant, book-keeper or tax adviser how that horsebox was used;
• If you have been using a horsebox for both business and personal use, consider telling HMRC before they approach you.  But be sure to take advice from your accountant beforehand; and
• Make sure that VAT is being correctly accounted for if there is mixed personal and business use.

Fiona adds: “HMRC is unlikely to punish honest mistakes – it will simply require you to repay the tax that should have been payable.  However, if you mislead HMRC and depending on whether there is deliberate concealment or not, they can impose a penalty of between 20% and 100% of the tax due.”