Owain Thomas successfully represented HMRC in HMRC v Pendragon Plc  UKSC 37. The Supreme Court unanimously overturned the Court of Appeal’s judgment and found that a complex tax avoidance scheme developed by KPMG and implemented by the Pendragon group was an abuse of law and should be redefined to remove the tax advantage gained. It held that the result of the scheme, the sale of distributor cars with almost no VAT charged, was contrary to the purpose of the legislation and had the essential aim of obtaining an illegitimate tax advantage for Pendragon.
The case is the first consideration by the Supreme Court of this principle of European law.
The judgment clarifies the scope of the principle as it applies to domestic VAT legislation and provides a clear statement of the manner in which this principle should be applied by the lower courts and tribunals. Lord Carnwath adds an important concurring judgment discussing the role of the Upper Tribunal in cases giving rise to an important point of principle in a specialist field.
Read the judgment here.