Customs & Excise says Warranty Holdings, now owned by Ford, set up a scheme through a separate company, WHA, which enabled it to recover VAT on the cost of repairs carried out under the terms of the warranty policy.
“This gave them a competitive edge against other companies,” says a Customs & Excise spokeswoman. “The case went to tribunal which we won on March 25 on the grounds that car repairs were not supplied to WHA, so they were not entitled to reclaim VAT.”
Peter Head, Warranty Holdings chief executive, confirmed that WHA, the company's third party administration business, had been taken to tribunal. “As a consequence it is on file that Custom & Excise has come down with the decision that confirmed there is no avoidance of VAT,” he says. “They do not agree with the way in which we have handled our reclaims. We are appealing against their decision.”
The group must submit its appeal by May 20. Customs & Excise points out a precedent has already been set with an irregular tax recovery case it won against the Halifax bank last year.
Sources claim the decision might have implications for repairers if money from reclaimed VAT had been repaid to them, although Customs & Excise says only Warranty Holdings is involved in the case.