GE CAPITAL Woodchester Ltd has brought legal proceedings claiming it has overpaid some €19 million to the Revenue due to the State’s alleged failure until 2007 to properly implement an EU directive related to hire purchase transactions.

The case relates to the VAT treatment of hire purchase transactions.

The company claims the relevant Irish legislation did not conform with European law until certain amendments were introduced by the Finance Act 2007.

The proceedings were admitted to the Commercial Court yesterday by Mr Justice Peter Kelly on the application of Patrick Hunt SC, for GE Capital Woodchester Ltd (GE), part of GE Capital Global Consumer Finance.

The court has been asked to clarify the legal position after the appeals commissioners of the Revenue rejected the company’s claim of entitlement to some €5.48 million in bad debt tax relief arising from amounts unpaid by hirers of equipment. GE claimed the effect of the refusal meant that, where a customer defaulted on a repayment arrangement, the full amount of output tax due on the sale of goods had been paid to the Revenue, although the company had received payment of only a portion of the VAT from the person hiring the goods.

The €5.48 million sum was assessed by the Revenue for VAT arising from hire purchase transactions carried out by GE for the periods of November to December 2001 and September to October 2002. GE claims entitlement to some €19 million for total bad debt tax relief for periods between January 1999 and April 2007.

After the commissioners rejected GE’s argument, the firm asked that the relevant legal issues be decided by the court