back to article Ford faces tax bill for unsold cars

A court ruling has thrown into doubt a company's right to reclaim VAT relating to goods that it later repossessed. The ruling could undermine the usefulness of businesses retaining the right to repossess goods they supply to other businesses. The Court of Appeal has told car maker Ford that it could not escape liability for …

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  1. Luis Ogando
    Stop

    A little unfair

    So, the government spend time, money and effort trying to get us to use overpriced, poorly-maintained and tardy public transport instead of our nice shiny cars, and then, when less people buy cars because of this (and, no doubt, the recession) they then sting the car manufacturers for tax on, effectively, unsold stock.

    Car dealerships are closing and people are losing their jobs. This will already affect the car manufacturing industry without money-grabbing beaurocrats, hiding behind all manner of legal mumbo-jumbo, sticking their boots in.

    FFS, HMRC - at least TRY to help us escape the recession..!

  2. Anonymous Coward
    Anonymous Coward

    Zero rate intercompany sales

    Looks to me like this would be another case where zero rated company to company sales would be beneficial. This was first suggested as the fix for carousel fraud.

    If vat is only charged when a sales is made to a customer by a vat registered business, then this would not be a problem. Ford would sell its cars to the dealers at zero rate. Only when the dealership sells the car to the customer is vat charged and paid. There is no fighting over who has the vat and who doesn't, since the car isn't sold and so doesn't have sales tax.

    It would reduce the number of businesses who need to be monitored for correct charging of VAT. Reducing the likely hood of vat fraud.

    It would eliminate carousel fraud because the goods are never sold with vat to another business who then claims vat back.

    It would reduce the overhead of vat accounting on UK business who sell to other UK businesses.

    It would remove the need for cash accounting, while improving the cash flow for everyone.

    It would need fewer government vat inspectors, freeing taxes for other things.

    It would be more consistent with inter-Eu country sales which are zero rated.

  3. alain williams Silver badge

    This is stupid

    The government effectively gets to keep the VAT on the unsold goods and when Ford, presumably, sells the cars to someone else gets the VAT again.

    If Ford doesn't get paid - then it should not have to pay the VAT (or be able to reclaim it).

  4. John
    Go

    Tax experts

    Problem is.. if a sale is made there is tax payable, there is no cause for non payment to the vat man as the sale has been made,there is no allowance for non payment and they know it they are just trying it on.

    Normal process is to pay the vat and claim it back from the purchaser of the good as they probably give more than 90 days credit anyway.

    This VAT rule has been present for years.. there really is no news here.

    Now if this law could be changed , that would really be news

  5. Justin Clements

    tax man...

    ..wins everytime.

    how about issuing the full invoice when payment is received then?

  6. Eddy Ito
    Black Helicopters

    What? Gubbermint screwing folks again!

    Move along, please. Nothing to see, no news here. Keep moving.

  7. Anonymous Coward
    Flame

    VAT MY BUTTOCKS!

    VALUE ADDED TAX???

    WHEN A RETAIL COMPANY GOES OUT OF BUSINESS AND NEVER SELLS MANUFACTURER STOCK, THE RETAIL COMPANY DELIVERED NO VALUE TO THE MANUFACTURER WHO RECLAIMED THE STOCK, NOR DID THE RETAIL COMPANY DELIVER ANY VALUE TO THE CONSUMERS WHO DID NOT BUY THE STOCK!

    They better rename the tax...

    SMT

    Screw the Manufacturer Tax!

  8. Martin

    @AC 10:28

    VAT is, by definition, applied all the way up the supply chain as a tax on the 'value added' by each company. A "VAT" applied only to consumer purchases is just a "sales tax".

    I just tried thinking about the VAT rules for intra-EU trade and it gave me a headache.

  9. jake Silver badge

    Eh?

    Let me get this straight ... The dealer was effectively a consignment shop which didn't actually sell the consignment, causing the actual owners of the goods to reclaim them ... And yet the actual owner has to pay tax on something that they already own and haven't sold?

    That's fucked up. Remind not to do business in the UK until this is fixed.

  10. John Angelico
    Stop

    VAT A Shemozzle!

    Whilst IANAL and "circumstances alter cases" and "you must have the documents" [Thank you, Mr Crun], I would expect that reservataion of title provisions are designed to make the sale conditional on complete payment being made by the debtor.

    Consequently the failure of payment by the car yard should ipso facto result in an undoing of the deal - there was no sale because the conditions were not fulfilled.

    Dear me, you Poms seem to have regular trouble with your law. It's as if Shakespeare ("First, kill the lawyers") has been trumped by Gilbert & Sullivan ("The law is the true embodiment/of everything that's excellent" - Chancellor in Iolanthe).

    It must be the end of civilization as we know it! :-)

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