Livery yard - Trading Standards?

[Cowpony]

You cannot offset a lose making business they are taxed as seperate entities. Or should I say the loses from one business cannot be offset against another when calculating tax liability .

Actually you can in certain circumstances. That is why HMRC will look carefully if you keep making losses, and will classify your business as a hobby if you never make a profit. There are lots of exemptions and offsets available if you meet the requirements, but you have to meet them exactly.

 

[popsdosh]

Actually you can in certain circumstances. That is why HMRC will look carefully if you keep making losses, and will classify your business as a hobby if you never make a profit. There are lots of exemptions and offsets available if you meet the requirements, but you have to meet them exactly.

You can spread your personal allowance between several businesses but you cannot under any circumstances I have ever come across offset the profits of one seperate business with the loses from another. If you could I would as my competing horses would be a seperate business

 

[criso]

The interesting thing is that business would have no business tax to pay due to the small business rebate. up 6K and then a sliding scale up to 12K

Actually the example is much more complex as there is a second livery yard, a farm and some other businesses on the property.

It was just to give an idea of scale.

Slightly off topic, but does that mean that people who are currently having problems with private stables classed as non domestic as they are too far from the house have nothing to worry about as they will qualify for a rebate anyway.

 

[popsdosh]

Yep thats correct!
Also the other businesses if they are seperate businesses will get their own BR relief as each business is liable for their own BRs . The farm will have none as they are totally exempt from business rates

 

[Cowpony]

You can spread your personal allowance between several businesses but you cannot under any circumstances I have ever come across offset the profits of one seperate business with the loses from another. If you could I would as my competing horses would be a seperate business

If you make a loss on an unincorporated business you can offset it against other income if you meet all the requirements. If you make a loss on an incorporated business you can only offset any losses against against another company in the same group. Tax is a very complicated thing ( I have spent 30 years doing it and I still don't know anything approaching all of it!) so it is difficult to comment without knowing the specifics.

 

[criso]

Yep thats correct!
The farm will have none as they are totally exempt from business rates

It's complex, yes you have a farm but if there is also a livery business on the farm plus other industries in farm buildings it gets tricky

And presumably there are rules in place to prevent people arbitrarily splitting a business into 3 to avoid rates.

When I was a kid, I remember the guy who owned the yard where I kept my ponies introduced a few calves, chickens (many) and some pigs on site to classify it as a farm but he got caught out and it was classed a livery yard. We were quite relieved when they went as the chickens were a real pain, completely free range and all descended if you tried to feed your horse to steal it.

 

[chocolategirl]

Not necessarily.

Firstly even if there is full occupancy of all the boxes and no liveries are poor payers you are still only at £45500.

If they don't own there is rent, even they do own then are there mortgage payments?

If they are lucky enough to own outright then there are business rates.

And you might be shocked at how much maintaining all the facilities and grazing would cost plus the people to manage it.

Not saying they are losing money but they may be in profit for only a small amount at the end of it.

This is the reality for a huge number of yards particularly DIY yards. It's a lifestyle choice for a lot of YO"s and believe you me, if all of them were to close because they make little or no profit, wow, where on earth would you all go??!! Wake up and smell the coffee please!!

 

[popsdosh]

It's complex, yes you have a farm but if there is also a livery business on the farm plus other industries in farm buildings it gets tricky

And presumably there are rules in place to prevent people arbitrarily splitting a business into 3 to avoid rates.

When I was a kid, I remember the guy who owned the yard where I kept my ponies introduced a few calves, chickens (many) and some pigs on site to classify it as a farm but he got caught out and it was classed a livery yard. We were quite relieved when they went as the chickens were a real pain, completely free range and all descended if you tried to feed your horse to steal it.

Its not that complex they will work out BRs on the buildings that are used outside agriculture and then charge accordingly for example if the livery is part of the farm they would be liable for BRs on those buildings used as part of the livery. Other businesses would be responsible for Brs in the buildings they occupy.

 

[Tnavas]

Not necessarily.

Firstly even if there is full occupancy of all the boxes and no liveries are poor payers you are still only at £45500.

If they don't own there is rent, even they do own then are there mortgage payments?

If they are lucky enough to own outright then there are business rates.

And you might be shocked at how much maintaining all the facilities and grazing would cost plus the people to manage it.

Not saying they are losing money but they may be in profit for only a small amount at the end of it.

Sorry but you obviously don't understand how certain aspects of accounting work - firstly you can only claim the interest expense on a mortgage as tax deductible - the mortgage repayment itself is not considered an expense.

 

[Tnavas]

If you are accusing me of saying that Please FGS read my bloody post! I actually put up the link for the OP to report the issue to HMRC.
Perhaps you would like to retract that statement or dont quote me in future.

As for the insurance just because they dont have insurance it does not change their liability if there is an issue! It just means they risk losing everything if things do go wrong. Its a businesses choice if its not mandatory. As others have pointed out maybe liveries should take a bit more responsility themselves and not use yards that dont have adequate cover because ultimately if its their horse that gets out and causes an accident its them im going for not the yard owner!
We all know though 80% of liveries today are going to the cheapest yard and that may be because they cut corners now is that the provider of liveries fault or the owner going there !

Hi popsdosh - Sorry for the misunderstanding - the problem with forum posting - I wasn't refering to you personally, but to the folks that some time ago were so up in arms because some people were able to keep their horse while on the dole. They thought it was appalling yet here they are actually supporting tax avoidance.

 

[Tnavas]

You cannot offset a lose making business they are taxed as seperate entities. Or should I say the loses from one business cannot be offset against another when calculating tax liability .

This depends if they are a self employed or a company. Companies are taxed separately but if you are self employed you only file one return as it is a personal return. I have three businesses in my return each year.

 

[hairycob]

I love the way that people are naïve enough to believe that just because someone is giving invoices out they must be legit because it would be daft to have paperwork if you weren't declaring for tax. Let me give you a real life example:
Yard I was at for a few months last year - new family turn up, umpteen out of control kids, neither parent "work". The 2nd time I meet the dad (on the middle of bathing my horse so no escape) he spent 20 minutes telling me he he hasn't worked for over 8 years due to ill health - bad back. But he's not lazy, oh no, he will do any cash in hand work he can get - gardening, fencing, labouring, patios, block paving etc & usually he manages to get work at 3/4 days per week. He told me that 2-3 times a year someone (jealous ******* was his phrase) will report him to benefits people but they always manage to convince them that it's malicious. He gives receipts & invoices if asked for & it's ripping off two ways by not being declared to tax or benefits. He makes them out in a company name. The company doesn't exist. God knows he gets away with it, but he does. Wife was quite open about it as well. Flipping galling when he keeps saying - earned £300 this week laying a patio or whatever when you are trying to get ready to ride after a hard day at work but we did invent a new game - Daily Mail bingo!

 

[popsdosh]

I love the way that people are naïve enough to believe that just because someone is giving invoices out they must be legit because it would be daft to have paperwork if you weren't declaring for tax. Let me give you a real life example:
Yard I was at for a few months last year - new family turn up, umpteen out of control kids, neither parent "work". The 2nd time I meet the dad (on the middle of bathing my horse so no escape) he spent 20 minutes telling me he he hasn't worked for over 8 years due to ill health - bad back. But he's not lazy, oh no, he will do any cash in hand work he can get - gardening, fencing, labouring, patios, block paving etc & usually he manages to get work at 3/4 days per week. He told me that 2-3 times a year someone (jealous ******* was his phrase) will report him to benefits people but they always manage to convince them that it's malicious. He gives receipts & invoices if asked for & it's ripping off two ways by not being declared to tax or benefits. He makes them out in a company name. The company doesn't exist. God knows he gets away with it, but he does. Wife was quite open about it as well. Flipping galling when he keeps saying - earned £300 this week laying a patio or whatever when you are trying to get ready to ride after a hard day at work but we did invent a new game - Daily Mail bingo!

I didnt say they must be ! Just stupid and Advertising if they are trying to hide a business !! We all know there are cheats out there in all walks of life but having a livery business is not easy to run under the radar when they come looking unlike your example.

 

[criso]

Sorry but you obviously don't understand how certain aspects of accounting work - firstly you can only claim the interest expense on a mortgage as tax deductible - the mortgage repayment itself is not considered an expense.

Actually I am right in the middle of doing my tax return and wfh some of the time and am quite clear on which can be claimed as an allowable business expense.

Repayment of the mortgage may not be an allowable expense for tax purposes but it still needs to be paid and could be the difference on whether the business is viable or not.

Many people both potential livery managers and owners look at a yard, see x boxes at so much per week and think it's earning a lot of money. It's not the case, as an livery i see people take a yard and realise within a year the figures don't add up. Many don't last more than a year or so.

 

[Cowpony]

Actually I am right in the middle of doing my tax return and wfh some of the time and am quite clear on which can be claimed as an allowable business expense.

Repayment of the mortgage may not be an allowable expense for tax purposes but it still needs to be paid and could be the difference on whether the business is viable or not.

Many people both potential livery managers and owners look at a yard, see x boxes at so much per week and think it's earning a lot of money. It's not the case, as an livery i see people take a yard and realise within a year the figures don't add up. Many don't last more than a year or so.

I think this bit of the thread has gone a bit off track. A business actually has two types of profit - one for tax purposes, because there are special rules about what you can and can't claim for tax - and an accounting profit, which shows how you have done financially. Even that doesn't show what you actually have left in the bank at the end of the year, because there are things you can deduct in your accounts which aren't cash (such as depreciation of assets).

We were talking about profits for tax purposes because the OP suggested that the livery yard in question wasn't paying tax, and somebody suggested that the owners must be defrauding HMRC because with revenue of £50K you must pay tax. We were explaining that that wasn't necessarily the case.

But you make a good point Criso, for anybody out there thinking of setting up a yard and thinking of buying. Mortgage payments will eat very heavily into your cashflow, and you don't get the benefit of deducting the whole payment against your income for tax purposes - it's only the interest that you can deduct. And also it's only the interest relating to the premises used for the business, so if you have unused outbuildings or a house which you use as your family home only, you can't claim the interest relating to those parts.

 

[Tnavas]

Re

Actually I am right in the middle of doing my tax return and wfh some of the time and am quite clear on which can be claimed as an allowable business expense.

Repayment of the mortgage may not be an allowable expense for tax purposes but it still needs to be paid and could be the difference on whether the business is viable or not.

Many people both potential livery managers and owners look at a yard, see x boxes at so much per week and think it's earning a lot of money. It's not the case, as an livery i see people take a yard and realise within a year the figures don't add up. Many don't last more than a year or so.

Profit for taxation purposes is totally different to whether the business is viable.

If the business is making enough to repay the mortgage and the running expenses then in many ways it's a viable business. Consider how you would be financially if you didn't have that income to pay the mortgage.

 

[criso]

Re

Profit for taxation purposes is totally different to whether the business is viable.

If the business is making enough to repay the mortgage and the running expenses then in many ways it's a viable business. Consider how you would be financially if you didn't have that income to pay the mortgage.

I think I agreed that mortgage repayments were not an allowable business expense for tax purposes, though interest is.


However it can be a big part of your costs. If you didn't need the premises for the business you would have a different property and your mortgage would be lower so the two are directly linked. If you don't live on site then it's completely separate to your domestic arrangements.

People are very quick to look at what is being charged for a service and assume it is all going straight in the owners pocket. I listed some of the expenses that may be incurred in the course of running a yard that maybe people hadn't considered. There's lots of info on the govt websites for anyone who needs to check which can set against tax. I missed some out like electricity and water which wagtail pointed out are quite high.

My post was not intended to be an accounting guide for potential livery managers; it was meant to highlight that there is less money to be made than people assume.

 

[pixie]

And this is why all my livery paperwork gets sent to the accountant!

 

[smellsofhorse]

Just because the yard almost certainly doesn't owe tax, it doesn't mean they shouldn't declare income. If they don't owe anything they won't be charged - but it's up to HMRC to make that decision, not the individual because they CBA filling out a few forms...

The morality of reporting is a different issue - but on the basis that someone bending rules probably bends them elsewhere (like liability insurance) then it does make it a bit more important.

I agree with this.
Just because they "probably" don't earn enough to pay tax doesn't mean they shouldn't declare their earnings.

Everyone should declare everything and the appropriate authorities will decide what they do and don't owe.

 

[ILuvCowparsely]

I wonder how many people here who are pro reporting this yard, avoid paying VAT sometimes when face with a job needed doing to house - car - horsebox - muckhill removal - large waste removal, would pay cash so get their job for cheaper when asked by a tradesman that you will have that knocked off the bill for cash payments, or paying for a new saddle - new roof on the stables etc. Most wont admit they have paid cash in the past or will in the future to omit paying VAT!! Or when on holiday try bringing some booze/fags in their cases to avoid tax!!

 

[ester]

I will try and pay cash - but only because I know it is a pita to get to a bank when it is open . Never had anything knocked off though .

 

[Tnavas]

I wonder how many people here who are pro reporting this yard, avoid paying VAT sometimes when face with a job needed doing to house - car - horsebox - muckhill removal - large waste removal, would pay cash so get their job for cheaper when asked by a tradesman that you will have that knocked off the bill for cash payments, or paying for a new saddle - new roof on the stables etc. Most wont admit they have paid cash in the past or will in the future to omit paying VAT!! Or when on holiday try bringing some booze/fags in their cases to avoid tax!!

Not me - I may pay cash but don't ask if there is no GST (VAT). I always ask for an Invoice/Receipt if the work being done may be considered part claimable.

Not all traders who accept cash are up to mischief!