- 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.