Legislative error caused taxpayers to delay claim

Between 1989 and 1997 the taxpayers made supplies of vehicles by means of hire purchase. Sometimes customers defaulted on their obligations under the agreements and this gave rise to a right of the taxpayers to terminate repossess the vehicle and sell it. When the net sales proceeds were less than the sums due under the original agreement the taxpayers suffered bad debts.

In 2007 (HBOS) and 2009 (Lloyds) made claims for bad debt relief for periods between 1989 and 1997. HMRC denied these claims because the property condition was not met. However in 2016 the Court of Appeal in GMAC v CRC [2017] STC 1247 said the property condition was unlawful under EU law. In February 2019 HMRC paid the taxpayers the bad debt relief claims plus interest running from the dates of their claims until February 2019.

A dispute arose as to whether as HMRC...