Credit note evidence

The taxpayer was an authorised Ford car dealer.

Ford supplied it with certain models on a dealer sold basis i.e. the taxpayer would be invoice the full price but the obligation to pay was deferred. Ford retained title to the cars until they were sold.

The taxpayer went into administrative receivership and Ford repossessed all the cars issuing credit notes to the taxpayer. Ford then sold the cars to the receivers on the same terms.

HMRC assessed the taxpayer for input tax wrongly credited to its VAT accounts in respect of the first sales.

The taxpayer paid this but then reclaimed it on the basis that the credit notes had not been properly issued for VAT purposes.

HMRC rejected the claim so the taxpayer appealed to the VAT tribunal which dismissed the appeal as did the High Court.

The taxpayer argued before the Court of...