In Pendragon PLC v HMRC (and related appeals) (CA – 23 July) an accountancy firm advised a group of companies to enter into a complex scheme with the intention of only accounting for VAT on its profit on ‘demonstrator cars’ rather than on their full sale price. Four associated ‘dealership’ companies sold various ‘demonstrator cars’ to three associated ‘captive leasing companies’ under leaseback arrangements. The ‘captive leasing companies’ assigned the benefit of the lease agreements and the underlying cars to a Jersey bank (S) in return for a substantial 45-day loan facility. A month after these transactions another associated company (PD) entered into an agreement with S to acquire its car hire business. This was treated as a transfer of part of S’s business as a going concern and therefore as outside the scope of VAT. PD then sold the cars to...
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In Pendragon PLC v HMRC (and related appeals) (CA – 23 July) an accountancy firm advised a group of companies to enter into a complex scheme with the intention of only accounting for VAT on its profit on ‘demonstrator cars’ rather than on their full sale price. Four associated ‘dealership’ companies sold various ‘demonstrator cars’ to three associated ‘captive leasing companies’ under leaseback arrangements. The ‘captive leasing companies’ assigned the benefit of the lease agreements and the underlying cars to a Jersey bank (S) in return for a substantial 45-day loan facility. A month after these transactions another associated company (PD) entered into an agreement with S to acquire its car hire business. This was treated as a transfer of part of S’s business as a going concern and therefore as outside the scope of VAT. PD then sold the cars to...
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