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Dealers to resubmit VAT claims

A House of Lords ruling will allow dealers to resubmit claims for overpaid VAT on demonstrators.

Trevor Jones, chartered accountant, welcomed today’s decision on the Fleming/Conde Nast appeals by HM Revenue and Customs (HMRC).

It says the decision of the House of Lords now releases claims made prior to June 2003 previously rejected as ineligible. The claims related to erroneously paid VAT on the sale of demonstrator cars and the receipt of "back end" volume bonuses from manufacturers dating back to 1973.

In addition, says Trevor Jones, dealers who have been paid but their initial claim reduced on technicalities should now be entitled to receive a further payment. Unfortunately full compensation for compound interest on the repayments will have to wait several years until the GLO is heard and settled or the tribunals are heard.

Michael Jones, partner with Trevor Jones, said: "This is fantastic news for the UK motor trade in the current difficult retail climate.

"In our opinion this means that dealers who made a claim which was unfortunately rejected will now see their payment, which should provide some much needed additional income in 2008. We also believe that dealers who did not make an original claim are now likely to be eligible for at least part payment. All of this will help profitability in what is likely to prove a very difficult year."

Sue Robinson, NFDA director, said: "This is good news for dealers who have put claims in that missed the original deadline of June, 30 2003. These should now be paid on the basis of the judgment.

"Those few businesses eligible that have not yet made claims should do so as soon as possible, before HMRC put legislation in place to close this gap. For those dealers who have already submitted claims following the earlier hearings of this case, the House of Lords decision means that these claims should be paid without further impediment."

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