Fleet News

Thorn seeks to appeal against VAT ruling

THORN UK has confirmed that it will seek leave to appeal against an Appeal Court decision which ruled its VAT 'grouping' scheme contravened taxation law.

The ruling came after Customs & Excise appealed against an earlier VAT Tribunal decision which upheld Thorn UK's use of a complex series of transactions to reduce its VAT liability on company cars by 90% (Fleet News November 8).

Tax experts are divided over the ultimate outcome of the protracted legal battle, with some defending the scheme as legitimate exploitation of a loophole in tax law but others maintaining it was blatant tax avoidance. The loophole in the law was closed last year after the VAT Tribunal ruled against Customs & Excise (Fleet News March 10, 1995), but some companies are believed to have used similar schemes prior to then.

Thorn's corporate affairs director Jim Donovan said: 'Customs & Excise has been successful on this occasion, but we believe that the interpretation will not be sustainable in the long term and we are going to seek leave to appeal to the House of Lords.'

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