Dangers facing the industry are imminent, the House of Commons Employment Committee reported, because of threats to the bloodstock industry from new VAT regulations.
From January 1, bloodstock sold in Britain will be subject to a VAT rate of 17.5 per cent, as opposed to 5.5 in France and 2.7 in Ireland. Leading auctioneers Tattersalls, who sell the vast majority of bloodstock in this country, have already decided to switch their premier Houghton Sale from Newmarket to Fairyhouse in Ireland next year.
Yesterday's report said: 'If action is not taken as soon as possible to remedy the basic disadvantage under which it is labouring, the horseracing industry in which the UK is a world leader could go into a very rapid decline.'
Coming on top of difficulties caused by low prize money and recession, the VAT rules could 'spell disaster for the UK industry, which at present is the world leader in thoroughbred breeding'.
The racing industry is so closely interconnected that decline in one area inevitably has a serious impact elsewhere. 'We note that the Thoroughbred Breeders' Association estimate that as many as 75 per cent of the 12,000 jobs in the UK breeding industry would be at risk as a consequence of the VAT disadvantage and that this leaves out of account any resulting unemployment in training or racing,' the Committee's report said.
As a solution, it wants racehorse owners to be able to register for VAT, enabling purchasers to reclaim the tax as permitted in other EC countries. But Customs & Excise are reluctant to distort the strict business character of VAT registration.
The Committee calls on Customs & Excise to be flexible, regretting that they regard horseracing 'not so much as a major source of employment and tax revenue, but rather as a rich man's hobby'.
Richard Spring, MP for Bury St Edmunds and chairman of the Employment Committee, said later that the VAT registration solution was widespread on the Continent and perfectly legal. David Gibson, who is president of the Thoroughbred Breeders' Association, added: 'I don't see how we're any different from people who produce and sell tennis rackets.'
Martin Pipe's exciting chaser Miinnehoma is more likely than not to run in Saturday's pounds 30,000 SGB Handicap at Ascot. After Peter Scudamore schooled the nine- year-old on the gallops by Pipe's Wellington stables, the champion trainer said: 'I was pleased with the horse, and at the moment the odds are 60-40 in favour of him running. But he is also in the Welsh National and the King George VI.'Reuse content