Dog Breeding

Discussion in 'Accounts & Finance' started by MegKing1994, Jan 18, 2020.

  1. MegKing1994

    MegKing1994 UKBF Newcomer Free Member

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    Hi,

    There has been a lot of confusion over dog breeding and tax returns etc.

    If someone breeds a litter of dogs every year or every couple of years - if they make a loss, can it be deducted against any profit in the current year? Is it actually a business? Does it have to be reported on a tax return? Even if there is an ongoing loss currently?

    Do HMRC only want to know if you make a profit? If that is the case the losses can be carried forward?

    If you mate a dog in one tax year but it doesn't have pups, can all of those expenses be taken off any income when it does eventually have pups? Even if its 2 years later?

    TIA
     
    Posted: Jan 18, 2020 By: MegKing1994 Member since: Sep 21, 2008
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

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    Posted: Jan 18, 2020 By: Scalloway Member since: Jun 6, 2010
    #2
  3. MegKing1994

    MegKing1994 UKBF Newcomer Free Member

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    Thank you for the link - The whole litter would be sold for considerably more than that figure, however, if reared well etc the inevitability is that there would be a loss.

    Do HMRC really want to know about a hobby that often makes a loss?
     
    Posted: Jan 18, 2020 By: MegKing1994 Member since: Sep 21, 2008
    #3
  4. Scalloway

    Scalloway UKBF Legend Free Member

    15,818 3,339
    HMRC are not happy to cover the losses for hobby business.
     
    Posted: Jan 18, 2020 By: Scalloway Member since: Jun 6, 2010
    #4
  5. MegKing1994

    MegKing1994 UKBF Newcomer Free Member

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    I just looked at one of the links on the KC website where it takes you to HMRC badges of trade - which is even more confusing!
     
    Posted: Jan 18, 2020 By: MegKing1994 Member since: Sep 21, 2008
    #5
  6. Mr D

    Mr D UKBF Legend Free Member

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    Then you have a business.

    Perhaps sell for higher prices if selling at a loss? There are dog breeders around who do make a profit. Perhaps the relevant dog group / club can advise on how to make the business more profitable?
     
    Posted: Jan 18, 2020 By: Mr D Member since: Feb 12, 2017
    #6
  7. KAC

    KAC UKBF Ace Free Member

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    Hi @MegKing1994 From your previous posts, it appears that you are making this query in respect of a client and not personally. If that is the case, is your client based in England and therefore covered by the new Animal Welfare Regulations effective from October 2018?

    Have they obtained a licence under the Act as required by Regulation 2?

    If they have, they are probably in business and if they haven't they probably should have if they are producing regular litters.

    Have a look here as well
     
    Posted: Jan 19, 2020 By: KAC Member since: May 7, 2017
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  8. MegKing1994

    MegKing1994 UKBF Newcomer Free Member

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    Thanks all.

    Litters are irregular. Not usually even annually. A breeder licence is not required unless HMRC classify them as a business. Which I would say they are not as they don't regularly trade, nor do they make a profit as for them that is not what it is about - But producing good quality dogs who are health tested and improve the breed lines.

    So, would it be fair to say that the income should be entered under other income on the tax return and the expenses relating to the litter be put in as a cost of that income?

    Thank you everyone for your help with this.
     
    Posted: Jan 19, 2020 By: MegKing1994 Member since: Sep 21, 2008
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

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    Which is pretty much what a business does. Income in one part, expenses in another.
     
    Posted: Jan 19, 2020 By: Mr D Member since: Feb 12, 2017
    #9
  10. CA85

    CA85 UKBF Contributor Free Member

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    Look at the "badges of trade" as mentioned in an earlier post. If it is a trade then it goes in the tax return and you can utilise the loss as appropriate. If it not a trade, only a hobby, then it does not go on the tax return and the loss is just a personal expense and nothing to do with the tax position.
     
    Posted: Jan 20, 2020 By: CA85 Member since: Oct 9, 2019
    #10
  11. KAC

    KAC UKBF Ace Free Member

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    Are these the same clients who have a dog training business and want to sponsor a dog show team?
     
    Posted: Jan 20, 2020 By: KAC Member since: May 7, 2017
    #11