Bloodstock Industry: VAT (Hansard, 2 February 1993)

The Minister of State, Department of Transport (The Earl of Caithness)
My Lords, the Jockey Club has made proposals for changes to the rules intended to make ownership more of a business activity and therefore allow some owners of racehorses to register for VAT. Customs and Excise are looking urgently at the proposals and further meetings have been arranged.

§ Lord Peyton of Yeovil
My Lords, what does "urgently" mean in this context? Does my noble friend realise that it would seem to many people odd—even perverse—if Ministers were now seen to prefer the narrow construction put by the Excise authorities on a regulation of their own making against the sustaining of employment and the maintenance of overseas earnings?

The Earl of Caithness
My Lords, "urgently" means urgently. A meeting is being held this afternoon with a view to reaching a speedy conclusion and taking the process further forward. I said to my noble friend when he last asked me this question before the Recess that we were waiting for the Jockey Club to present a proposal. That has now been presented and we are acting quickly on it. I was interested in my noble friend's second question. His thinking seems to have evolved. I recall that on 19th July 1972 a certain Member for Yeovil voted for the VAT regulations that now control this issue.

§ Lord Mellish
My Lords, this is not a party matter. The industry is in serious trouble. The Government have made great concessions to Mr Stein of Ladbroke —for what reason I shall never know. Betting shops will be able to open late at night and so on. Yet the 80 people who really matter—the people who own the horses—are being penalised. Why? When are the Government going to do something about it?

The Earl of Caithness
My Lords, when I answered a Question similar to this on 17th December I gave a catalogue of things that the Government had done. I can only say to the noble Lord that discussions are continuing.

§ Lord Renton
My Lords, even if registration of racehorses for VAT is allowed, how far will it go to overcome the great disadvantage of the French and the Irish having much more favourable arrangements than we have?

The Earl of Caithness
My Lords, we will have to wait and see what can be agreed between Customs and Excise and the Jockey Club to see how the situation can be ameliorated. I say to my noble friend that there are plenty of opportunities for the industry to take advantage of the various concessions that Customs and Excise have granted.

§ Lord Wyatt of Weeford
My Lords, have the commissioners of Customs and Excise taken any further the notion that advertising could be carried on the backs of jockeys or on the saddle cloths of horses as they parade in the ring, thereby entitling owners to register for VAT?

The Earl of Caithness
My Lords, these are some of the issues that are being discussed. All this relates to the question of what is meant by a business, and what is the criterion for VAT.

§ Lord Clark of Kempston
My Lords, can my noble friend say whether he anticipates that my right honourable friend the Chancellor of the Exchequer will be saying something about this on 16th March?

The Earl of Caithness
My Lords, we can all anticipate. I can say nothing.

§ Lord Donoughue
My Lords, we have been around this course so often that noble Lords might be excused if they felt that it was time for a steward's inquiry—into the Minister, perhaps, for not trying to win the race; perhaps into the noble Lord, Lord Peyton, although I support him enormously, for excessive use of the whip. Why do not the Government take a decision? There are two practical solutions—to register for VAT or to establish our rate at the same rate as our competitors in Europe, the Irish and the French. Why not take a decision and not hold more and more meetings? Who is governing the country —Ministers or officials of the Customs and Excise?

The Earl of Caithness
My Lords, I hope that the noble Lord had a very good day's racing at Towcester before Christmas and that he also backed some winners. All I can say to him is that we are in discussions. Those are proceeding as quickly as possible now that we have received the paper from the Jockey Club.
Lord Manton: My Lords, can my noble friend confirm that there is no restriction in either British or European law on a special rate being applicable to 81 bloodstocks? Is the Minister aware that the racing industry has been awaiting a reply for the past 14 years?

The Earl of Caithness
My Lords, as I understand my noble friend, the question of bloodstocks takes us somewhat beyond the remit purely of the racehorse industry because there are bloodstocks of other types in the horse industry. We are very aware of the anxieties of the industry. It has made them well known to us and we are in discussion.

§ Lord Elton
My Lords, does my noble friend recognise therefore that these industries are inter-dependent and that we are talking not only about racing, but also about the breeding, the training and the selling of horses, which together represent a very major industry making a considerable contribution to the balance of payments? Does my noble friend agree that it is a question for urgent resolution, using the term in the sense that most of your Lordships would understand and not perhaps as it would normally be used by people answering for Her Majesty's Government?

The Earl of Caithness
My Lords, my noble friend will have had great experience. We listened to him with great interest when he answered for Her Majesty's Government. He knows that these discussions have to take place and fulfil their course.

§ Lord Peyton of Yeovil
My Lords, I hope that my noble friend will have in mind the fact that when I voted for these regulations I did so both with characteristic docility and also in the unfounded faith that they would be sensibly construed and administered. Does he not understand that the failure of Ministers on this occasion to take charge and make a sensible decision may well be taken as an admission by them that the construction of excise regulations has become, for them, a no-go area?

The Earl of Caithness
My Lords, I disagree fundamentally with my noble friend about the lack of action by Ministers. Indeed, my right honourable friend the Paymaster General spoke to my noble friend this morning and explained to him fully what the situation is and the action which has been taken. As I said, we have now received the report from the Jockey Club and we must get on and consider it.