News - tax cases

Expressly forbidden

A private family company had one director who drove long distances on company business. The company bought a car with the relevant board minute noting that it was to be used for business purposes only by the director and that any private use would be a breach of the director's employment. Customs refused the company's subsequent claim to recover the input tax on the car. The company appealed successfully to the tribunal so Customs appealed to the High Court which also found for the company. Customs appealed to the Court of Appeal.
The Court of Appeal said that a purposive approach had to be applied to the relevant legislation i.e. Article 7 of the VAT (Input Tax) Order 1992 SI 1992/3222. The aim of the scheme in Article 7 was to disallow claims for input tax on cars purchased for business ...