VAT and company cars
The restrictions on recovering VAT on the purchase or leasing of company cars has of course long been a sore point with businesses and it seems hardly a month goes by without some case coming to Court.
In September HMRC issued Revenue & Customs Brief 60/2007 announcing their intention to appeal the VAT Tribunal’s decision in the cross- border leasing case RBS Deutschland Holdings GmbH.
The Tribunal decided that a German leasing company which took advantage of the different VAT rules in Germany and the UK and did not account for output tax in either country could nevertheless reclaim input tax on the purchase of the cars. It also found that the scheme was not “abusive” under Halifax principles. The case now goes to the Court of Session.
Meanwhile the European Court of Justice has ruled that restrictions on business persons reclaiming VAT on company cars in Italy is unlawful. Following the judgement both resident and non-resident businesses operating in Italy can submit VAT refund claims for 2003 to 2006.
