The UT decision in HBOS/Lloyds [2023] UKUT 00013 is the next chapter of a story which began back in 2006 with a challenge bought by KPMG on behalf of GMAC concerning the legal vires of the UK bad debt provisions. In the period from 1979 to 1989 UK legislation provided for VAT declared on supplies of goods for which the supplier had not received the full price to be adjusted by a BDR claim, but on condition that the supplier did not have a retention of title clause and subject to having initiated or proved in insolvency proceedings. From 1989 to 1997 the requirement to prove in the insolvency was removed from the provisions but the condition excluding claims where there was a retention of title clause continued.
Source KPMG
