HMRC victory in car warranty tax scheme

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A scheme designed to avoid VAT on car repairs that could have cost the Exchequer hundreds of millions of pounds a year has failed after a successful challenge by HMRC.

The Supreme Court ruled unanimously against the scheme, started in 1998, which involved the restructuring of a group selling car warranties so that VAT on car repair services could be recovered.

The insurer’s responsibility to repair the cars was devolved to a claims handler via two Gibraltar reinsurers.

The scheme involved several members of a group of companies headed by...

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20th May 2013 15:19

HMRC v WHA Supreme Court

There are many things that might be said, but... the original Tribunal involved around £14m in VAT. Where do HMRC get a figure as large as £600million? Dear HMRC, please advise!

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20th May 2013 16:03

Leshoward- I would presume the amount of VAT that is currently paid in relation to such repairs.

If the scheme had succeeded, I think we can be pretty certain it would have become standard practice, not least due to commercial pressure.

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