Fleet News

Customs wins £15bn VAT battle

THE fleet industry's attempt to reclaim as much as £15 billion in VAT levied on company cars since 1972 has failed. In a landmark judgement, the European Court of Justice has ruled that the UK's treatment of VAT on business cars was correct. Allied Domecq, Royscot Leasing and TC Harrison had challenged the UK's VAT rules from tribunal in 1995 to the High Court in 1996, then the Court of Appeal, and finally the ECJ.

Hundreds of other fleets, leasing companies and dealers had lodged claims to recover VAT on business cars, pending the ECJ's ruling. Dawn Primarolo, Treasury Minister, said: 'We welcome this clear endorsement of the position of successive Governments on the VAT treatment of business cars. I am very pleased that the ECJ has shared our view that it is legitimate to restrict recovery of VAT on the purchase of business cars.'

Customs & Excise said that if the ECJ had ruled in favour of the three appellants it would have cost Customs hundreds of millions of pounds and forced it to introduce a far more complex system for companies to account for VAT on the private use of company cars.

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