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Silent bonuses

29 September 2015
Issue: 4520 / Categories: Tax cases , VAT
Why Pay More For Cars Ltd v CRC, Upper Tribunal (Tax and Chancery Chamber), 8 September 2015
The company was a car dealer and representative member of a VAT group. As such it accounted for VAT on supplies made by group members. This included output tax on bonus payments received from car manufacturers that supplied vehicles to the group. 
As a result of the decision in Elida Gibbs Ltd v CCE [1997] STC 1387 HMRC accepted that VAT was not due on the receipt of the bonus payments which should have been treated as discounts on the original prices of the cars. As a result they invited claims from motor dealers that had overpaid VAT. To enable these HMRC compiled a table setting out the periods and manufacturers for which evidence was available. The table included “silent periods” for which there was no specific evidence that dealers had accounted for VAT.

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