The future of VAT and Livery Yards

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Last year in November the Office Of Tax Simplification published a report (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/657213/Value_added_tax_routes_to_simplification_web.pdf) which reviewed various possible changes to the current VAT system.

Whilst just a report one area that was reviewed was a “significant changes to the threshold” including lowering the VAT threshold. Of course this has led to discussion, since publication, of the implications to businesses around the UK.    

The report states that “reducing the threshold from £85,000 to £43,000 (for example) would impact between 400,000 and 600,000 businesses.” and that “it would increase compliance costs for a large number of businesses”.

VAT and Livery Yards

If a significant reduction to the threshold was made it could have a material effect on livery yards. As stated it would result in increased compliance costs which could impact on a livery yard in terms of both fixed and variable costs.

  • Fixed Costs: submission, accounts preparation etc.
  • Variable costs: additional admin work involved in everything that generates revenue (extra assistance, products sold).

When any business is faced with possible new costs for compliance and control we believe it’s a good time to review the tools, technologies and techniques being used. The right changes, implemented correctly, can be used to mitigate some of the associated costs.

(It’s at this point we’ll add a disclaimer that we’re not accountants and that you should always take the advice of a professional on these matters)

Typically livery yards use a yard diary to arrange any extra assistance needed. Then they keep track of the regular services they provide for liveries somewhere else (or often just in the owner/manager’s/staff’s heads). 

When it comes to invoicing these multiple sources have to be collected and collated to allow invoices to be sent to the liveries. This can already be time consuming and error prone at the best of times. However, if a livery yard is required to comply with VAT regulations the effects are compounded.

Lets consider the various different VAT rate assignments a yard might have:

  • General livery - 0% VAT 
  • Feed - 0% VAT
  • Schooling on behalf of the livery - 20% VAT
  • Tacking up for a livery - 20% VAT

At The Yard helps you manage your VAT compliance by allowing you to assign different VAT rates to services and products. As you and your liveries use At The Yard, charges will be automatically generated with the correct VAT codes and amount. No more manual collection and collation needed!

This means that when it comes to invoicing everything can be done automatically. This includes showing the correct VAT amount for each line item and an automatic VAT breakdown for all the different VAT codes (see the example below). All this data can be exported to a common file format and subsequently imported into whatever accounting package you (or your accountant) use.

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Overall, once setup, it means that keeping track of VAT from a billing point of view is no more complicated for you than not tracking VAT at all. Saving you time and money, allowing you get back to running your livery yard.

Going forward with possible future changes to the VAT system combined with other initiatives like “Making Tax Digital” (https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital) it’ll be more important than ever to have a structured, and where possible automated, system for keeping track of billing on your livery yard. At The Yard offers a solution that is bespoke for the equine industry helping you meet your obligations with a solution tried and tested by fellow livery yard owners in the equine community.

Please visit our contact page and get in touch and take a look at our features page https://www.attheyard.co.uk/features/ to see all the other ways that At The Yard can help save you time and money.