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Cambria Automobiles (South East) Ltd & Invicta Motors Ltd – UT – 2003 Italian claim and s85 agreement – whether subsequent claim for same period valid – no – taxpayer loss

  • The dispute involves claims for overpaid output tax on the sale of demonstrator motor vehicles between 1973 and 1996.
  • The taxpayers initially accounted for VAT on the profit margin of these vehicles but later submitted claims based on the interpretation of the law in the case of Commission v Italian Republic.
  • HMRC accepted these claims and settled them in 2006 under a section 85 agreement.
  • However, it was later discovered that there were errors in the calculation methodology used for the claims, resulting in larger claims.
  • The taxpayers submitted new claims in 2009, but HMRC rejected them.
  • The taxpayers appealed, and the Upper Tribunal (UT) set aside the earlier decision due to errors of law.
  • The UT concluded that the section 85 agreement precluded the taxpayers from making any further claims, even if they were valid under the correct methodology.

Source KPMG


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