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Business Matters: Racing & the tax man: Tip of the week: Relief available to trainers hit by bad debts.

Byline: Julie Butler

IF you were to chat in the owners' and trainers' bar with any trainer and delicately ask about the financial difficulties of the glorious art of training racehorses, you might find your favourite handler transformed into a Victor Meldrew character, ranting and complaining. If you can escape from the list of problems before midnight, you're very lucky!

The principal area of concern for the trainer will probably be bad debts. On a more serious and helpful note, there is VAT relief for this nightmare and it is important to claim the support from HM Customs & Excise.

The racing business can make a bad debt relief claim if they are not on Cash Accounting and a debt is six months past payment date. Many businesses do not bother and this can be an expensive mistake. If you have not yet claimed the VAT bad debt relief, you can now claim for bad debts incurred between six months and three and a half years ago. The system is simple, in that you just add your bad debt relief claim to box four of the VAT Return. For debts from January 1, 2003, you no longer have to write to your customer notifying him of your VAT bad debt relief claim either.

This relief is not restricted to racehorse trainers but extends to all small racing businesses. Problems can occur when some of the debt has been recovered by the offset of the value of the horses in the yard. In each case, is the supply of horses VAT-able and at what value?

The tax tip of the week is to check each bad debt situation and only work for owners who pay promptly.

- Julie Butler FCA is the author of the LexisNexis Butterworths Tolley title Equine Tax Planning. ISBN: 0406966540. To order a copy call 020 8662 2000. Email: j.butler@butler-co.co.uk
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Title Annotation:Sports
Publication:The Racing Post (London, England)
Date:Aug 29, 2004
Words:315
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