The force had been seeking to recover £500,000 in VAT payments made on police cars. The High Court ruling means that Customs and Excise policy regarding VAT treatment of police and government has been vindicated.
Mr Justice Collins dismissed an application for judicial review saying that on true construction of Section 33 of the 1994 VAT Act did apply as to bar a refund. Customs commissioners were correct in their interpretation of the law, he added.
The case was organised by tax consultancy Williams Jeffery Barber which argued that Section 33 of the Act applied between January 1993 and August 1995. After then, the law was changed to allow police authorities to claim back the VAT they paid on marked cars but not on most unmarked cars.
If WJB and the police authorities had succeeded in their claim, Customs faced being hit by further retrospective claims.
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