Car dealers' £750m VAT cheer

CUSTOMS & Excise is close to handing back a massive £750m to Britain's car dealers in wrongly-levied VAT, plus interest, over the past three decades.

The Vatman has set a deadline of 31 May to sort out compensation payments for one of the biggest foul-ups in the collection of the tax since it was introduced in 1973.

For years, Customs had been wrongly charging VAT on demonstration and courtesy cars used by motor dealers and this resulted in a series of lengthy legal wrangles, including an attempt by Customs to limit claims for repayment to three years.

The latest dealer to benefit is Lookers, which said today it has received a cheque for £15m and will spend the money on further acquisitions.

Britain's biggest dealers, Pendragon and Reg Vardy, have yet to settle.