Fleet News

European Court to rule on £15bn VAT battle

THE European Court is to decide whether HM Customs and Excise should repay an estimated £15 billion to the UK fleet industry. In a landmark decision at the Court of Appeal, Lord Justice Simon Brown ruled that Customs' policy of blocking VAT recovery on the acquisition of company cars, leased cars and demonstrators should be examined by the European Court of Justice.

Three UK fleets - RoyScot Trust, Allied Domecq and TC Harrison - have consistently argued that UK interpretation of the law contravenes the European Commission's Sixth Directive on VAT. This week the 'fleet three' won backing from the Court of Appeal, following a hearing last week, to take their case to Europe. However, it could be two years before the case is heard.

If upheld, their challenge could pave the way for fleet operators to recover billions of pounds worth of VAT paid on cars used for business dating back to 1973 - although the Government sought to limit its exposure by imposing a three-year limit on backdated claims for wrongfully paid VAT last summer.

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