Dog and cat breeders (and pet sellers on, for instance, social media) operate in the black economy in that most often they do not pay tax. They are cash dealers. As a consequence, they are not registered with HMRC in the UK. Things are going to change as the Treasury is all out of money and have to find ways to raise it or reduce expenses (often welfare). Britain is comprehensively cash-flow insolvent.
One proposal is that HMRC will make it obligatory for dog breeders and pet sellers to register for tax with HMRC before they are granted a license to breed dogs (and I expect cats). The councils grant licenses. In the future it seems that they will work with HMRC to check that the applicant is registered with HMRC beforehand.
This will be a big change for pet breeders as they are accustomed to operating ‘under the radar’ and have done so since time immemorial.
Some detail:
HM Revenue & Customs (HMRC) is intensifying efforts to combat tax evasion within the black economy by implementing new measures targeting specific sectors. Under these initiatives, individuals operating in certain industries will be required to register for tax before obtaining or renewing their licenses.
Targeted Industries:
The sectors currently under scrutiny include:
- Dog Breeders and Pet Sellers: Approximately 520,000 individuals in these fields will be affected by the new regulations.
- Waste Management Firms: These businesses are also included in the crackdown, with similar requirements to register for tax before licensing.
Rationale Behind the Measures:
HMRC’s decision to focus on these industries stems from concerns about widespread tax evasion, particularly among sole traders who often operate on a cash-in-hand basis. The black economy is estimated to constitute about 10% of the UK’s GDP, with significant under-reporting of business profits.
Implications for Cat Breeders:
While the current focus is on dog breeders and pet sellers, cat breeders are likely to be included in future phases of this initiative. The government’s approach suggests that any individual or business involved in the breeding or sale of animals as pets may eventually be required to register for tax purposes before obtaining or renewing their licenses.
Current Licensing Requirements for Cat Breeders:
In England, individuals or businesses selling animals as pets must obtain a license from their local council. This applies regardless of whether the business is home-based or operates online. Licenses are typically valid for one to three years, with fees varying by council.
Potential Future Changes:
Given HMRC’s current focus on dog breeders and pet sellers, it is anticipated that similar requirements will be extended to cat breeders in the near future. This would mean that cat breeders would need to register for tax before obtaining or renewing their licenses, aligning with the government’s broader strategy to formalize and regulate the black economy.
Recommendations for Cat Breeders:
- Stay Informed: Regularly consult official HMRC communications and local council guidelines to stay updated on any changes to licensing and tax registration requirements.
- Prepare for Registration: Begin organizing financial records and understanding tax obligations to ensure a smooth transition if new regulations are implemented.
- Seek Professional Advice: Consider consulting with a tax professional or accountant to navigate the complexities of tax registration and compliance.
By proactively addressing these potential changes, cat breeders can ensure compliance with future regulations and contribute to the broader effort of formalizing the economy.
Source: The Times of 13th February 2025: Dog breeders among targets in tax crackdown on black economy (there is no point linking to the page as you have to be subscribed to the newspaper to read it).
