A VAT dodge involving selling a car while it was en route to the UK has been
ruled ineffective, in one of the earliest uses of a wide-ranging ‘abuse of
rights’ doctrine awarded to HM Revenue & Customs last year.
In the case involving Nissan, HMRC challenged a scheme devised by a former
Nissan employee to import cars into the UK from Japan via a complicated series
Nissan had only imported three cars into the UK using this structure, and
saved £7,268.74 in VAT and customs duties. But the company was planning to
import more vehicles using the same structure before HMRC stepped in.
According to the decision, Nissan was using the import of the three cars to
test whether it could continue using the VAT and duty scheme on a much larger
‘The appeal has been brought in order to test the effectiveness of a scheme
devised on behalf of NMUK (Nissan UK) by which it seeks to reduce substantially
the incidence of UK VAT on imported cars,’ said tribunal chairman Colin Bishopp.
HMRC contended that the scheme amounted to an abuse of rights and as a result
Nissan should not be entitled to any advantage from the scheme. HMRC also argued
that the cars were not imported by retail buyers but by the company.
Bishopp dismissed Nissan’s challenge on the grounds that the scheme was
abusive as it was designed solely to cut the VAT bill.
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