Fleet News

Leasing schemes under fire in VAT loophole clampdown

SPECULATION is mounting that the Government may introduce widespread VAT anti-avoidance laws in the November 26 Budget after losing millions of pounds in VAT payments due to so-called corporate tax 'planning'. A joint study by Customs & Excise and the Treasury is believed to have concluded that an increase in tax 'planning' is the main reason for a shortfall in VAT revenues. In 1995-96 revenues were £5 billion lower than forecast 18 months earlier.

In recent months Customs & Excise has contested a number of high profile VAT cases both inside and outside the fleet arena. While, not all of them directly relate to the August 1995 VAT changes, they are all VAT related. In the wake of such cases the Government introduced a three-year capping provision for retrospective VAT repayments to the fleet industry which prevents large amounts of cash being repaid (Fleet News July 26). In a bid to crackdown on companies avoiding paying VAT, Customs & Excise has established taskforces across the country to investigate various VAT avoidance schemes, some of which are in the fleet industry.

A Customs & Excise spokeswoman said: 'Any suggestion of Budget measures is pure speculation. We are currently looking at why there was the VAT shortfall. But we are looking at VAT avoidance across the board both centrally and through our regional teams and trying to tackle the problem. It is not just company cars but there are other VAT avoidance schemes in other areas.'

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