VAT Abuse vs. Commercial Operations in Pendragon

The Supreme Court in Pendragon has some useful guidance on VAT abuse vs. normal commercial operations. HMRC v Pendragon Plc [2015] UKSC 37, June/15, concerned a scheme designed by KPMG to exploit parts of the VAT system for demonstrator cars for a large car retailer. With the tax tribunals and higher courts split 2-2 it’s hard to find a consistent theme all the way through. But the Supreme Court (SC) decided in the end that the scheme was an abuse and struck it down. The problem is the line between wrongful abuse and legitimate tax planning has become so blurred that legal certainty is undermined. This damages business and trade. So the SC’s guidance on normal commercial operations as, generally not being an abuse is helpful in negotiating the abuse vs. tax planning tax minefield. The Pendragon judgment can be found on Bailii at http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKSC/2015/37.html&query=title+%28+pendragon+%29&method=boolean

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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About Eamon McNicholas

Tax Barrister, Accountant www.EamonMcNicholas.com
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