Breeding groups on social media have been filled with questions asking why they have recieved a letter from HMRC sparking a mix of concern and the typical miss-information among breeders. These letters are part of a broader tax clampdown aimed at ensuring tax compliance and arguebly improving animal welfare standards within the breeding industry
The recent letters from HMRC encourages breeders to make “voluntary disclosures” of income earned from the sale of animals.
Breeders are being warned that failure to comply could lead to further investigations. Richard Hooker, IVC Evidensia’s UK country medical director, has voiced support for the clampdown, highlighting its potential benefits for animal welfare.
“The regulatory and licensing regime for dog breeders needs urgent review,” Hooker stated. “If authorities and agencies were able to look at all the ways to work collaboratively in a harmonised way, and work together to close existing loopholes, it could have an even greater effect.”
Understanding the letters
The letters notify breeders that they must register for self-assessment and complete a tax return if their gross trading incomes exceed £1,000 after expenses.
These notices are not random and they are based on HMRC’s increasing research of the breeding industry, particularly following a significant rise in pet ownership during the pandemic. In the same article, Paislei Godley, Associate Director of the Prime Accountants Group in the West Midlands, explained the surge in breeding activities:
“The pandemic led to a significant hike in breeding as pet ownership spiked, but, ultimately, if people are breeding and selling for trade, they should be declaring it to HMRC. In this scenario, they are inviting taxpayers to respond voluntarily. They wouldn’t send the letter if they didn’t have some sort of evidence, so anyone receiving one shouldn’t ignore it.”
Between 2015 and 2019, HMRC recovered over £5 million from 257 separate cases examined by a dedicated taskforce targeting puppy breeding operations. This recent campaign appears to be an extension of those efforts, intensified by the recent upsurge in breeding activities.
So whose dobbing the breeders in?
Like almost all Facebook groups, comments outside of the responding pesons expertise are generally unhelpful.
A trend within the comments pretty much blames other breeders for reporting them and while we’re sure this happens based on animal welfare concerns, these comments are shortighted.
In addition to tax enforcement, the UK has implemented the Organisation for Economic Development (OECD) Model Reporting Rules for Digital Platforms which began on January 1, 2024.
Digital platforms that facilitate the sale of goods and services, including those used by breeders, are now required to collect and report specific seller details to HMRC. This move is likely to increase the visibility of breeding income, further aiding HMRC’s efforts to ensure tax compliance.
What Breeders Should Do?
Breeders receiving HMRC letters should take them seriously and seek to comply by making the necessary disclosures.
Ignoring these notices could result in more severe investigations and potential penalties. It is advisable for breeders to consult with tax professionals to ensure they understand their obligations and to navigate the self-assessment process effectively.
HMRC’s latest actions represent a significant shift towards greater accountability and regulation within the UK’s dog breeding sector. While the crackdown may pose challenges, it also presents an opportunity to align practices with legal requirements and improve overall animal welfare.
For further guidance, breeders are encouraged to review HMRC’s official communications and consult with relevant local authorities to ensure full compliance with all regulatory and tax obligations. Please be careful about information on Facebook Groups, it’s always best to seek help from a professional.
Further reading
Govenments advice on selling goods via a digital platform
Vet Times New Breeder Clampdown
