GMAC UK PLC v Revenue & Customs (Rev 1) [2010] UKFTT 202 (TC) (06 May 2010)

GMAC UK PLC v Revenue & Customs (Rev 1) [2010] UKFTT 202 (TC) (06 May 2010)

The property and insolvency requirements in UK VAT bad debt relief legislation prior to 1997 were incompatible with EC law and must be disapplied. The retrospective time bar under Finance Act 1997 s.39(5) lacked transitional relief and is unenforceable as contrary to Community law. The combination of reliefs does not result in unlawful windfall or breach of fiscal neutrality. GMAC is entitled to bad debt relief in principle for the relevant period.

Citation
[2010] UKFTT 202 (TC)
Parties
Appellant: GMAC UK PLC; Respondents: The Commissioners for Her Majesty’s Revenue and Customs (VAT)
Jurisdiction
United Kingdom
Judgment Date
06 May 2010
Procedural Posture
VAT Bad Debt Relief Appeal / First Tier Tribunal (tax) Decision on Principle
Outcome
Appeal allowed in principle
Legal Topics
VAT, Bad Debt Relief, Fiscal Neutrality, Direct Effect of EU Law, Retrospective Time Bar
Tax Law European Union Law VAT Bad Debt Relief Fiscal Neutrality Direct Effect of EU Law Retrospective Time Bar

Case Brief

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Parties

GMAC UK PLC

Appellant

The Commissioners for Her Majesty’s Revenue and Customs (VAT)

Respondents

Procedural Posture

VAT Bad Debt Relief Appeal / First Tier Tribunal (tax) Decision on Principle

Legal Issues

  1. 1 Whether UK statutory property and insolvency requirements for VAT bad debt relief before 1997 were compatible with EC law
  2. 2 Whether the combination of bad debt relief, regulation 38 adjustments, and de-supply under the Cars Order resulted in a windfall contrary to EC law
  3. 3 Whether the retrospective time bar under Finance Act 1997 s.39(5) is contrary to EC law

Ratio Decidendi

The property and insolvency requirements in UK VAT bad debt relief legislation prior to 1997 were incompatible with EC law and must be disapplied. The retrospective time bar under Finance Act 1997 s.39(5) lacked transitional relief and is unenforceable as contrary to Community law. The combination of reliefs does not result in unlawful windfall or breach of fiscal neutrality. GMAC is entitled to bad debt relief in principle for the relevant period.

Court Disposition

Appeal allowed in principle

Orders

  • Retrospective time bar under Finance Act 1997 s.39(5) disapplied as contrary to EC law
  • GMAC entitled to bad debt relief for period 1978-1997, subject to quantum agreement