Fleet News

'European Court is likely to block VAT recovery claims' - Fleet News Roadshow report

FLEETS are still awaiting a final ruling in the massive VAT claims brought by Allied Domecq, TC Harrison and RoyScot Leasing against Customs & Excise. The case concerns the right of companies to recover VAT on cars bought for business purposes, a right extended to leasing companies for the cars they buy to lease to customers since August 1995.

The three appellants' claims - with a significant number of similar claims pending from other leasing companies - have enormous sums at stake, with estimates of between £15 billion and £26 billion in the balance. The matter is now being addressed by the European Court of Justice, with a verdict not due for at least another 18 months. A similar recent case brought by the EC against France saw the advocate general find in favour of the French government, and if this conclusion is upheld by the ECJ, prospects do not look promising for the three British appellants.

'I cannot see these cases being won, and I think the ECJ will support the UK authorities in blocking VAT recovery,' said Sue Rathmell, senior manager, VAT, at Deloitte & Touche. She said there was more opportunity for fleets to take advantage of another recent ECJ ruling in the ARO Lease BV case, which effectively sanctioned that VAT should only be paid once, and in the native country of the lessor in instances of cross-border leasing.

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