Car dealers escape huge VAT bill

Thu, 15 May 2008



A plan by Her Majesty’s Revenue and Customs to charge VAT in recovery to car dealers has been successfully resisted following an important tribunal.

In a decision that has implications for the car selling and car finance industry, car dealer Camden Motors has successfully resisted HMRC attempts. The bill, if granted, would run into hundreds of millions of pounds for car dealers around the country.

Camden Motors made the case that vehicle dealers should only consider profit rather than income. HMRC had maintained that car dealers should be restricted in the level of VAT reclaimed.

David Raistrick, the automotive partner at Deloitte and Touche, was reported in the news as commenting: "This is a very important decision for Camden and the motor retail sector as a whole. If HMRC were to be successful with this approach it would cost the motor retail sector millions of pounds at a time when it can little afford it."
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