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Deadline looms for VAT claims

Dealers that used to have a franchised dealership that is now dissolved have less time to claim overpaid VAT on demonstrators, as it takes six weeks for a company to be resurrected to the Companies House Register.

Active dealers still have until March 31 to complete their VAT claims.

The reclaims relate to VAT overpaid in the period from the inception of VAT in 1973, until December 1996 on demonstrator vehicles.

Despite the widespread publicity surrounding the claims, many dealers are still under the impression they cannot make a claim because they have no records or that it is too difficult.

According to accountants Trevor Jones, neither of these reasons should prevent a dealer from pursuing a claim.

HMRC accepts that dealers are unlikely to have any records going back to 1996, let alone 1973 and therefore the claims are prepared using estimated figures based on both published tables and accepted practise.

In addition where a dealer trading through a limited company which has been dissolved in the last 20 years, it may be possible to resurrect the company and submit a valid claim to HMRC.

Trevor Jones said: “In most cases this is a straight forward and relatively inexpensive process and is well worth the effort when one considers that the average repayment is in the region of £50,000 plus simple interest.

“Where a past business was operated through a partnership or as a sole trader the position is even simpler.”

As noted above, dealers now have only weeks in which to submit these claims. Once the deadline of March, 31 2009 is passed there will be no more chances.

Trevor Jones said: “We would therefore strongly recommend that if you are a current dealer or an ex-motor dealer who has not made a claim, that you do not let this opportunity slip through your fingers.”

VAT claims resurface

The right to the VAT repayments has arisen due to a number of tax cases that have gone through the court over the last 10 years.

The reason is because demonstrator vehicles were incorrectly treated as “non qualifying vehicles” with the result that VAT was overpaid when the vehicles were then sold under the margin scheme.

In addition further repayments are payable due to the incorrect treatment of demonstrator bonuses paid by the manufacturer.

Following the result of a tax case at the European Courts, in 2002 dealers were given the opportunity to reclaim the overpaid VAT all the way back to 1973. However the original deadline for making these claims was June 30, 2003.

This could have been the end of the story but two further tax cases were heard in the House of Lords in February 2008 which reopened the window until March 31, 2009.

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