Revenue and Customs Commissioners v Volkswagen Financial Services (UK) Ltd

European Union – Value added tax. Articles 173(2)(c) of Council Directive (EC) 2006/112 should be interpreted as meaning that member states could not apply a method of apportionment which did not take account of the initial value of the goods concerned when they were supplied, since that method was not capable of ensuring a more precise apportionment than that which would arise from the application of the turnover-based allocation key. The Court of Justice of the European Union so held, among other things, in proceedings between the Revenue and Customs Commissioners (UK) and Volkswagen Financial Services (UK) Ltd concerning the method applicable for determining the recoverable part of the VAT incurred by that company in the context of its business consisting, among other things, in offering supplies of motor vehicles by hire purchase.

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