Readers' forum: Horse trading

A client sells electrical parts online through his limited company. The company recently purchased a new horse box for £50 000 plus VAT. This is used by my client’s wife who takes part in about 30 UK horse events throughout the year. The box is heavily covered with details of my client’s website and business activities and it is painted in company colours. The events are held throughout the country so the box is giving business exposure to my clients on a lot of major A roads and motorways. My client claimed 100% input tax on the box as an advertising expense.

The HMRC officer who carried out a recent compliance review said he was going to disallow all input tax on the basis that it is a non-business expense but after a discussion with HMRC’s policy team he has agreed to allow a 10% claim. I think...