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Lookers' £15m VAT refund 'in the bag'

HM Customs has agreed to repay Lookers Group for VAT overpaid on demonstrator vehicles between 1997 and 1996. The total amount receivable, net of expenses, will be at least £15m.

It will be disclosed in the company's next interim financial statement as an exceptional item within operating profit of £7m, and as £8m of interest received. The group expects to receive the VAT refund within a matter of days.

Lookers' finance director David Dyson said there were two other elements of the claim as well – one which is all but agreed, and another which may end up in court.

“It's a case of both parties interpreting the law in different ways”, he says. “The amount involved is so significant that, if we were proved correct, the additional amount the Treasury would have to pay all dealers would be so vast that I suspect they would be prepared to go to court.”

Dyson declined to comment on how much extra Lookers stands to gain, but he did say that “even if we got 100% of everything else it would be substantially less than the £15m that is already in the bag”.

The cash Lookers has won back from HM Customs will be used to reduce gearing and to fund the group's acquisition programme.

“We are talking to a number of parties, and we expect to have at least one acquisition in place within the next six weeks,” says Dyson.

Lookers plc reported 19% growth in pre-tax profits to £14m on turnover up 22% to £961m for 2003.

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