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(1) FJ CHALKE LTD (2) AC BARNES (WOKINGHAM) LTD v REVENUE & CUSTOMS COMMISSIONERS

It was not clear whether Community law gave rise to an entitlement to compound interest on tax exacted in breach of Community law, but in any event in the instant case such claims were time-barred.

6 April 2010

The appellant motor dealers (C) appealed against a decision ((2009) EWHC 952 (Ch), (2009) STC 2027) that their claims for compound interest on repayments of overpaid VAT were time-barred. C had been required under the UK law then in force to account for output tax on the sale of demonstrator cars in respect of which the recovery of input tax was blocked. A decision of the European Court of Justice then made clear that taxation of demonstrator cars in that way was contrary to Community law which required the sale of input tax blocked cars to be treated as exempt. Similarly manufacturers' bonuses had for a period wrongly been treated as payments for a supply of services by the dealer to the manufacturer. Again, following a decision of the ECJ, it was accepted that such bonuses should normally be treated as discounts by the manufacturers which reduced the value of their supplies. Therefore, in 1999, C made claims for repayment of the tax overpaid in respect of demonstrator cars and man...

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