Fleet News

Landmark VAT ruling means fleets can reclaim millions

FLEET operators can reclaim millions of pounds in overpaid VAT on the purchase of company cars after a landmark ruling by Customs & Excise. The decision centres on the payment of VAT on the manufacturer's discount on the car, which tax experts successfully argued should not be paid by fleet operators.

A European Court ruling involving cosmetics company Elida Gibbs established the precedent but Customs has only recently confirmed the ruling also applies to cars. A Customs & Excise spokesman said: 'This interpretation is correct. However, from what we understand from our control staff, the VAT treatment has been quite varied, so not all fleets will be eligible to reclaim VAT. If fleet operators believe they may be eligible, we would advise them to contact their local VAT office.'

The Government's imposition of a three-year cap on backdated claims for VAT will limit the payments but the total windfall could be as much £200m. Contract hire companies and commercial vehicle fleets remain unaffected by the ruling and larger fleets which have direct arrangements with the manufacturers will not qualify for the refunds.

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