a. Non-Domestic (Business) Rates
b. Value Added Tax (VAT)
Business Rates are due on most commercial property in theUK. Agricultural land and buildings are an exception. Often a landowner who is otherwise engaged in agricultural operations will commence a commercial shooting business on the same land. Commercial shooting is not an agricultural operation and is, therefore, liable for Business Rates.
If you suspect that a commercial shooting operation is taking place on agricultural land, you should contact the Valuation Office Agency (VOA). It is possible to do a search for any property on the VOA website www.voa.gov.uk. Click the ‘Business Rates’ tab at the top of the page, then click on ‘Check the rateable value for your property’, then click on ‘Find my property valuation’ and insert an address or postcode. If your search provides a negative return, the property is not valued for Business Rates but it could, nonetheless, be liable.
It is important to understand the different roles of the VOA and the local authority in the context of Business Rates. The VOA is responsible for the valuation of property and the maintenance of the Valuation List. The local authority is responsible for the collection of Business Rates by using the Valuation List and a multiplier that is set by central government. Currently, the multiplier is 41.4 pence in the pound inEnglandand 40.9 pence inWales(2010).
Business Rates are collected only by local authorities. The revenue raised is passed to central or devolved government. Details of a property that appears to have a commercial use but does not appear on the Valuation List for an area should be passed to the VOA for inspection with a view towards valuation.
When considering a valuation, the VOA will assess the principal use of the property. Game farms that produce birds for shooting are commercial operations and, unlike agricultural operations such as the production of chickens for food, have a liability for Business Rates. There have been several appeals against valuation for Business Rates made by game farmers, all of which have been denied. There have been at least two decisions in the House of Lords and Valuation Tribunals which ruled that the principal purpose of game farming was sport shooting, not food production and, therefore, was not an agricultural activity (See Annex B). If a valuation is made, arrears of Business Rates are liable only for the preceding year, backdated no further than 1 April.
Value Added Tax (VAT)
VAT is a tax on the value added to a product at each stage of its development. Food is zero-rated for VAT. This means that farmers do not collect VAT on food they produce despite the considerable value they have added to a nurtured animal or crop. Instead, they are able to collect back VAT they have paid in the development of their products. This is why farmers are all registered for VAT even if their business is too small to exceed the VAT turnover threshold set by government.
Game bird shooting for sport can be a commercial operation but sometimes it is not. There are considerable costs to producing game. The word ‘syndicate’ appears frequently in shooting. A syndicate can be a like-minded group of individuals who are engaged in a common pursuit.
In taxation terms this can mean that they share the burden of costs involved in shooting without making any profit. Conversely, a syndicate has come to mean any group of shooters (usually termed ‘guns’) who purchase shooting from commercial operators or arrange their own. Sometimes surplus shooting purchased or arranged by the syndicate is sold to others. In other similar situations, a landowner is a member of the syndicate that is shooting on his own land. If he makes a profit, he is liable to VAT if the turnover exceeds the government-set threshold of £70,000 (in 2010) for the payment of VAT or if he is otherwise registered for VAT.
The VAT rules concerning the operation of shoots on privately owned land are specific. The tax term ‘shooting in hand’ is used where a landowner keeps control of a shoot, makes all the necessary arrangements to stock the land with game and decides who participates in a shoot. If he accepts contributions towards the cost of maintaining the shoot from other guns whom he invites to the shoot, he is considered not liable for VAT if he also meets the following conditions:
a. Only friends and relatives shoot with him.
b. He does not publicly advertise the shooting.
c. His shooting accounts show an annual loss at least equal to the usual contribution made by a single gun over a year.
d. The loss is borne personally and not charged to any business of his.
In the circumstances above he need not charge VAT to the guns but he cannot recover as input tax any VAT that he incurs in maintaining the shoot. If a landowner or tenant grants shooting rights for less than their normal value to a syndicate of which he is a member, he must account for VAT on the open market value of those rights. If he supplies other goods or services, such as the services of a gamekeeper or beater, he must charge VAT in the normal way.
VAT rules for syndicates
If a syndicate is set up for individuals to contribute towards sharing the expenses of shooting, the syndicate is not normally considered to be making a supply of sporting rights to its members.
However, if the syndicate is regularly paid to provide shooting facilities to individuals who are not members, or it provides taxable supplies of other goods or services, then it is in business. The syndicate must, if its turnover threshold meets the criteria, account for VAT on all its supplies including those to its members.
There are several anomalies in the VAT regulations surrounding shooting. Even though the principal purpose of live quarry shooting is to provide ‘sport’ for the participants, there is no VAT liable on the sale of eggs, one-day-old-chicks, poults or mature game birds for shooting. This is because HM Revenue and Customs (HMRC) views game birds as creatures commonly eaten by the population in theUK. Similarly, most ‘pet’ animals are standard-rated for VAT in a pet shop but any pet animal, like a rabbit, who may be eaten for food, is zero-rated.
Game bird feed is also zero-rated for VAT. Generally, the only animal feeds that are standard-rated are tinned pet food and packaged seed for wild birds. Thus, game farmers, although engaged in a non agricultural, non-food producing commercial operation, are able to benefit from VAT exemptions intended for the production of food products.
Nevertheless, the sale of shooting is liable to VAT if it is made for commercial purposes. Some shoots in theUKare charging guns nearly £1,500 per day. Typically, there are eight guns in a syndicate. Shooting takes place several times a week in multiple locations over the typically 20-week season for partridge and pheasant. It is clear that these accumulated charges will greatly exceed the government’s VAT turnover threshold in a single tax year.
Commercial shooting is for profit and subject to taxation while, with private shooting, the costs are borne by members of a syndicate on a private and individual basis and are not taxable.
In 2006, HMRC approached representative shooting organisations with indications that shooting tax irregularities were occurring across the country. The crackdown by HMRC came after six years of research and campaigning by Animal Aid and included the publication of three major reports exposing VAT avoidance that was subsequently formally calculated to total between £12 million and £20 million. Evidence provided by Animal Aid also dealt with non-payment of Business Rates, by enterprises involved in the production and shooting of game birds. This evidence was passed on to HMRC, and a senior official of the agency was given a comprehensive briefing by Animal Aid. These numbered malpractices are quoted directly from HMRC’s April 2006 letter to shooters.
For more in-depths information on this subject please log onto the Animal Aid Web Site below to understand more on the taxation of shooting. You will then begin to understand how Britain’s shooting elite have managed to evade paying their tax, in particular not registering their commercial interests for business tax. http://www.animal aid.org.uk/images/pdf/booklets/opposeshooting.pdf