The American Repossessor

VAT’s gotta hurt

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 value added tax (VAT) on goods which it was not paid for and had to repossess, unless its contract with a car dealer foresaw that situation or it had subsequently agreed its actions with the dealer.