TaxCorporate Tax‘Abusive’ VAT scheme blocked

'Abusive' VAT scheme blocked

Complex car importing scheme designed to save VAT stopped by HMRC

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
of subsidiaries.

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
scale.

‘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.

Related Articles

Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2m Alia Shoaib, Reporter
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3m Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

3m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

3m Austin Clark, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

4m Emma Rawson