 HMRC attack on motor dealers
HMRC have lost a case against a motor dealer (Camden Motors) in the tribunal. HMRC are using legislation, intended to prevent avoidance schemes, to assess motor dealers even though there is no suggestion that the motor dealers are involved in avoidance schemes. It is yet another example of widely drafted anti-avoidance legislation which is then used by HMRC to maximise tax revenues in cases where there is no avoidance. Motor dealers are not the only recipients of assessments based on this particular anti-avoidance legislation: a bowling club has also been caught out by HMRC on this legislation although, again fortunately for the club, their appeal to the Tribunal was successful.
HMRC has assessed on the grounds that the new legislation means that Camden Motors is recovering too much of the VAT on its overhead costs. We understand that other similar cases are stacked up behind this case: for these motor dealers it will be a matter of waiting to see if HMRC continue with these cases and/or appeal the decision in Camden Motors. There is also the possibility HMRC will simply change the law to make it easier to win on such appeals.
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