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In HMRC v GMAC C-589/12 (3 September 2014) the CJEU found that GMAC could obtain bad debt relief under the Sixth Directive despite the fact that this would represent a windfall.

GMAC was a hire purchase company. It purchased cars from dealers and supplied them under hire-purchase contracts to consumers. GMAC incurred standard rate VAT on the purchase of the cars and charged VAT on its supplies to consumers. When a consumer defaulted GMAC repossessed the car and sold it at auction. Under the VAT (Cars) Order SI 1992/3122 the sale of a car at auction was treated as neither a supply of goods nor a supply of services. The issue was therefore whether the fact that the sale of the cars escaped VAT under domestic legislation precluded GMAC from availing itself from the direct effect of the Sixth Directive Art 11C on bad debt...

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