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Compound Interest in VAT

Jason Collins and Sam Davies McGrigors LLP summarise the current position of claims for compound interest being pursued by car dealerships in relation to VAT
On 28 June 2007 the High Court granted a group litigation order (GLO) to manage High Court claims brought by a number of car dealerships for compound interest on VAT which was refunded by HMRC between 2003 and 2005. The VAT refunded was paid to HMRC in periods running from 1973 through to 1996 on the disposal of demonstrator cars or other 'non-qualifying vehicles' and the receipt of manufacturers' 'back-end' bonus payments. The dealerships relied on the decisions of the ECJ in Elida Gibbs v Commissioners of Customs and Excise Case C-317/94 [1996] STC 1387 and EC Commission v Italy Case C-45/95 [1997] STC...

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