TaxCorporate TaxCar dealers set for £100m VAT reclaim

Car dealers set for £100m VAT reclaim

HMRC could be saddled with a bill of more than £100m in unclaimed VAT repayments from car dealerships following a landmark ruling

VAT victory: boost for car dealers

The Court of Appeal ruled in favour of the Midlands Co-operative Society
paving the way for the retailer to reclaim £100,000 worth of VAT on a business
it bought called the Leicester Co-op in 2001.

The court ruled that where a company bought another group’s trade and assets,
but not shares, it has the right to claim VAT repayments owing to the purchased
entity.
Previously it had been thought that without buying the shares, the tax could not
be reclaimed.

The ruling opens the door to dozens of other retail motor dealers who wish to
reclaim VAT repayments on companies they have acquired.

Businesses can reclaim VAT overpaid going back to 1973, advisers said.

Paddy Behan, head of indirect tax at Mercury Tax Group, said: ‘From my
experience I think it’s reasonable to forecast that total claims by the retail
motor industry alone could reach hundreds of millions.’

Companies can claim the VAT repayments until 31 March 2009.

It is understood that advisers are already identifying dozens of potential
claimants.
A spokeswoman for HMRC said: ‘This is a complicated judgment which
HMRC is looking at
carefully. We are taking legal advice before deciding how to proceed.’

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