FLEETS could be eligible for major VAT reimbursement following recent tribunals and court cases. The first of these is a mechanism for fleets to prove a car is bought purely for business purposes - and therefore reclaim VAT on its acquisition price - if they insure it only for business purposes. This argument has been successfully used by an accountant who insured company cars solely for business mileage, specifically excluding social, domestic and pleasure use, and none of the cars return to employees' homes in the evening.

Sue Rathmell, senior manager, VAT, at Deloitte & Touche, said: 'If you buy a car only for business purposes you should insure it only for business purposes, but you must be very careful that both you and your staff only use it for business, which means no stopping for shopping or for a drink.'

Further fleet VAT claims are likely to arise from the Elida Gibbs case, which affects VAT on volume rebates given by manufacturers to their customers. The European Court of Justice ruled that VAT was only due on the actual price a customer paid for goods, after rebates and discounts were applied. This could lead to a VAT windfall for fleets which have paid VAT on the acquisition price of their cars, and when VAT was also levied on their rebate, effectively a double tax hit.