VAT Tribunal Cases

Demonstrably capital

The appeal related to the sale of demonstrator cars by a car dealer. The demonstrator cars were purchased by the dealer from a consignment of cars for sale. Once they were too old to be used as demonstrators the dealer would use them as courtesy cars or company cars and then eventually the ex-demonstrators would be sold as used cars or at auction.

The European Court of Justice's decision in European Community Commission v Italian Republic [1997] STC 1062 which effectively laid down that where credit for input tax on the supply of goods to a person was excluded the subsequent supply of those goods by that person was exempt from VAT. Thus in connection with cars Article 7(4) of the 1992 Order was wrong in requiring VAT to be accounted for on the subsequent supply of cars in respect...