The potential value of claims for refunds of VAT paid on company cars dating back to 1973 has been estimated at £15 billion - but the Treasury move will prevent businesses claiming a large proportion of that figure back. Those who have already submitted claims will have them paid in full should the action eventually prove successful, but companies expecting to benefit automatically will be disappointed.
The announcement follows two VAT cases which the Government lost and was subsequently forced to pay out more than £350 million in backdated VAT. It also comes in the wake of losses this year against BT over VAT on delivery charges (Fleet News May 3) and Kingsway Furniture Group over VAT on interest-free credit.
An Allied Domecq spokesman said: 'Our advisers are currently studying the situation but this is potentially very bad news and we are very disappointed.'