HC Deb 28 January 1981 vol 997 c465W
Mr. Freud

asked the Chancellor of the Exchequer whether he is satisfied with the fairness of the arrangement whereby value added tax is charged in respect of entering a horse in a show but not if the horse jumps or runs; and if he will make a statement.

Mr. Peter Rees

[pursuant to his reply, 20 January 1981, c. 124]: Entry fees to competitions and events when charged by a person registered or liable to be registered for VAT attract the tax at the standard rate unless they qualify for exemption under the Value Added Tax (Competitions) Order 1980 announced by my right hon. and learned Friend the Chancellor of the Exchequer on 11 December 1980 in reply to my hon. Friend the Member for Bristol, West (Mr. Waldegrave).

The exemption applies only to certain competitions in sport or physical recreation. If the competition involving horses constitutes a sport (e.g. horeseracing or show-jumping which are clearly recognised sports), then the entry fees are exempt if either:

  1. (a) all the money raised from the entry fees is allocated to the prize fund for the event concerned; or
  2. (b) the body charging the fees is a non-profit making organisation established for purposes of sport or physical recreation.

I believe that the hon. Member may be particularly concerned about competition entry fees charged by agricultural show societies. Most such societies stage a show-jumping competition. Entry fees to this will only be exempt if (a) above is satisfied, since the societies will not qualify for (b), being established for agricutural rather than for sporting purposes.

All fees charged by these societies for the mere showing of horses and other animals or indeed for any other competitions not constituting sport or physical recreation will be taxable. Farmers registered for VAT and entering livestock for business purposes however will be able to recover the tax in their normal repayment claims on Customs and Excise.

It was never intended that the exemption would go wider than competitions in sport or physical recreation, subject to the qualifications I have specified. A line has to be drawn somewhere if the essentially broad-based nature of VAT is to be preserved, and agricultural societies are in no worse position than organisers of other non-sports competitions.

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