Your customs and tax questions answered

28 January 2021

Dr David Savage, Senior Manager, Customs and International Trade answers some frequently asked questions from horse owners on tax issues in The Irish Field.

Q: If an Irish racehorse trainer is sending a horse to race at Cheltenham (a temporary export) are they liable for VAT on arrival in Britian? And is the horse is owned by a private individual, how can they claim it back? 

A: As the UK has left the EU Customs Union, there will no longer be seamless movement of goods or animals between Ireland and GB. Unfortunately, this is also true for the movement of equines particularly as the Tripartite Agreement, regarding the movement of horses between Ireland, UK and France, is no longer operable since December 31st.For an Irish horse travelling to a race meeting in the UK, it will be necessary to enter the horse into an export customs procedure upon departure from Ireland.

  1. A full Temporary Admission authorisation – this option requires an authorisation from HMRC (British Revenue Commissioners) and may require a guarantee to cover import taxes. The authorisation once received is usually valid indefinitely and there is no limit on the value.
  2. Temporary Admission by declaration – this option can be used by making a declaration on the importation documents. There are restrictions as to the value and the number of occurrences per annum, and a deposit would normally be required by Revenue to cover any import taxes at risk. An application for repayment of duties is made upon the re-export of the horse from Britain.
  3. ATA Carnet – this is an international customs temporary import and export document, replacing the import declaration. It can be applied via the relevant Chamber of Commerce. ATA in most circumstances will require a guarantee and there is a fee for applying for ATA carnet. Upon the horse’s return to Ireland, the horse would enter the EU import procedure and apply for Returned Goods Relief in order to avoid paying any customs duties and import VAT upon re-entry to the EU.

Q: If a British racehorse owner wishes to send horse to race in Ireland (and then return), what are the implications?

A: Similar to the above, the British owner can apply for a temporary admission authorisation to Irish Revenue and, on return to Britain, avail of Returned Goods Relief. Alternatively, they can apply for ATA Carnet via the relevant Chamber of Commerce. It can take four weeks for the Revenue Authorities to approve a temporary admission authorisation so we would recommend that horse owners and trainers apply well in advance of their intended travel date.

Q: If a British breeder is sending a brood- mare to Ireland this spring to be covered by an Irish stallion (a temporary export), will they have to pay VAT on either or both legs of the journey? The mare’s value will have changed when she is going home in-foal.

A: In this scenario, the British horse owner can apply to the Revenue Commissioners for a full Temporary Admission Authorisation. Once this authorisation has been approved, it is usually valid indefinitely and there is no limit on the value of goods temporarily imported into Ireland.

Currently, it is not completely clear from the guidance provided online whether the Revenue Commissioners require a guarantee to be lodged against the value of the broodmare coming into Ireland on a temporary basis. It would be advisable for owners bringing mares to Ireland for breeding purposes to clarify this point with Revenue.

If a guarantee is required a typical bank fee would be in the region of 3%. So, for example if the import VAT amount was €10,000 and this was then the level of guarantee required, the bank cost would be circa €300. This bank fee/ cost should be compared to cost of incurring the import VAT.

A broodmare may enter Ireland via a Temporary Admission by declaration. In this scenario, Revenue would take a deposit for any import taxes at risk. The owner would need to apply for a refund of this money when the horse is re-exported from Ireland. In terms of the mare returning to the UK, again it should be possible to avail of Returned Goods Relief.

Even though the mare is in foal and this has changed the value, this does not affect the temporary admission criteria as Irish Revenue guidance has stated that animals may be imported under temporary admission for breeding purposes. Irish Revenue have confirmed that mares returning to Ireland in foal will be able to avail of Returned Good Relief and we have no reason to believe that HMRC would not apply the same rules for mares in foal returning to GB.

It would also be possible to use an ATA Carnet for the temporary importation of a horse into Ireland. The British breeder should contact a Chamber of Commerce in the UK for more details. Use of an ATA Carnet will attract a fee and would typically require a guarantee.

Q: What are the tax implications for an Irish breeder sending a mare to a British stallion?

A: If the mare is going from Ireland to Britain for breeding purposes, the owner should seek a temporary admission in the UK and apply for Returned Goods Relief in Ireland.

Q: Now that there is a free trade agreement between Britain and the EU, why would a horse be subject to customs duties?

A: In practice, there are no duties applicable to ‘Pure-bred breeding animals’ but there are duties of up to 11.5% payable on geldings that do not fulfil the Rules of Origin as set out in the EU/UK trade agreement.

In order to avail of the preferential trading conditions, set out in the UK/EU trade deal, it is necessary for animals to fulfil the Rule of Origin for horses. In practice, this means that there is a requirement for a horse to be ‘wholly obtained’ in the EU (for a horse imported into Britain) or in Britain (for a horse imported into the EU). ‘Wholly obtained’ in the context of live animals typically means that the animal has been born and raised in a country or customs jurisdiction.

A horse born in the USA, for example, but raised in Ireland would not fulfil the Rules of Origin as set out in the EU/UK trade agreement and therefore would be subject to customs duties upon import into the EU or UK. Horses that are ‘wholly obtained’ can avail of the pref erential customs duty rate of 0%, but this requires proof, and this may represent an administrational burden.

Use of the Temporary Admission procedure allows those moving horses between Ireland and Britain avoid this burdensome rule of origin administration. Customs procedures and compliance can be complex and BDO and Declaron (customs clearance agent) are available to assist.

If you have any queries related to the above, or to find out more, contact a member of our Brexit Taskforce:

Content and image adapted from The Irish Field.