Date posted: 18th Sep 2024
It seems HMRC have noticed breeders selling puppies and kittens on the internet and are focusing on “nudging” breeders to ask them to come forward in relation to the disclosure of profits from such activities.
The HMRC nudge tactic (nudging taxpayers, by letter, to ask them to check their tax affairs are in order) are well practiced now and if you receive a letter from HMRC, asking you to confirm whether you are profiting from such activities, then you need professional advice.
The last time HMRC tackled the non-disclosure of animal sales, it raised over £5.3m. Given the increased sales activity during the COVID periods, it is easy to see why HMRC would be targeting animal breeders again.
Depending upon the circumstances for the sale of the animals, it could be that the selling of the animals amounts to a trade, especially if the breeding takes place with the intention to make a profit by selling the offspring.
As well as income tax and national insurance on profits, serious breeders will need to consider whether they have breached the VAT threshold (currently £90,000 but it was £85,000 in some earlier years) and they may also end up with a bill for VAT.
As well as known websites for purchasing animals, HMRC may be able to access information from other government bodies (licence issuers), pet insurers, The Kennel Club or the RSPCA. So please don’t make the mistake of thinking that HMRC won’t know that you are breeding animals, even if you haven’t received a letter. It may be better to come forward now, rather than wait for the HMRC letter to land on your doormat.
We are very experienced in respect of making disclosures to HMRC and agreeing penalties, so if you need advice, please drop us a line on email or the “old dog and bone” (sorry, couldn’t resist that one!)
