GROUNDHOG DAY

摘要

HMRC has suffered yet another defeat in the courts relating to partial exemption policy. This particular decision, by the Court of Appeal, related to the attribution of overheads to taxable and exempt supplies. The case was Volkswagen Financial Services Limited (EWCA Civ 832). The appellant makes taxable supplies of cars, sold at cost price, generating no extra VAT (as no value is added). All the 'profits' are generated by the exempt finance charges. This prompted HMRC to attribute all of the overheads to the exempt finance supplies on the basis that only these created the wherewithal to pay the overheads. Despite that point, the Court of Appeal said there was a link between the overheads and the sale of cars.