NFDA tells car dealers – act now on VAT reclaims

Car dealers could face missing out on repayments for VAT incorrectly levied on demonstrator vehicles unless they act now to check on entitlement, according to the National Franchised Dealers Association (NFDA).

The recent House of Lords judgement on Sempra Metals Ltd related to the premature payment of corporation tax, but the decision may have a direct impact on VAT. The NFDA, which has been receiving detailed advice from accountancy firm PricewaterhouseCoopers on this issue for some time, believes action should be taken.

Sue Robinson, NFDA director, commented: ‘The NFDA is urging its members to contact either us, or their own professional tax advisers as soon as possible, in order to consider the prospects and merits of a claim for compound interest and the procedures to be adopted to protect their potential claim.’

The best way for car dealers to protect their positions is by legal proceedings, but there are time limits to consider.

A Group Litigation Order (GLO) that could lead to car dealers receiving substantial repayments for VAT incorrectly levied on demonstrator vehicles has been organised and the NFDA are investigating its scope.

‘Our initial understanding is that the GLO claim is based on a claim under European law. However, there may be alternative arguments which can be pursued and this is currently being considered in consultation with PricewaterhouseCoopers,’ said Robinson

However, Robinson believes that businesses should not wait for the outcome, but instead act now: ‘It may not be enough for potential claimants to simply wait and see what happens as various other lead cases make their way through the courts.’

Robinson adds: ‘We strongly urge our members to investigate their position as soon as possible, or else risk forfeiting any repayments they have a right to receive.’