Fleet News

Fleets face huge shake-up over VAT battles

THE fleet industry is poised for a massive shake-up of acquisition policies if HM Customs & Excise loses a series of high-profile legal battles. The VAT man is under pressure on three fronts as a number of key players seek to recover billions of pounds in backdated VAT.

Judgement is expected within the next three weeks following a two-day Court of Appeal hearing last week in which dealer group TC Harrison, Royal Bank of Scotland leasing subsidiary RoyScot Trust and Allied Domecq appealed following Customs victories on the way VAT is charged on company cars.

The three plaintiffs' cases - which contest the blocking of VAT on all company cars (Fleet News June 9 and June 30, 1995) - could result in the Government having to repay between £10 and £25 billion to fleets and leasing companies dating back to 1973.

Meanwhile, BT's historic VAT tribunal victory (Fleet News April 26) could also provide fleets with a multi-million pound windfall and pave the way for wholesale changes in acquisition policies. Customs is this week still considering whether to appeal.

The BT ruling will entitle fleets who have to date paid VAT on the delivery of vehicles to reclaim overpaid tax from as far back as 1973. Tax experts and industry associations are still assessing the full implications of the ruling as Customs decides whether to appeal, but if the decision stands it could prompt an increase in the number of fleet operators dealing direct with car manufacturers.

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