MG Rover administrator 'seeks £56m in overpaid VAT'

Administrators dealing with the collapse of UK car maker MG Rover ten years ago are attempting to recover £56m in overpaid VAT, the BBC has learned.

About 6,000 workers lost their jobs when the Birmingham-based car company entered administration in April 2005.

Unions say if the money is recovered it should go to the former workers.

BMW, which broke up Rover in 2000, is also claiming the VAT money, documents seen by BBC Midlands Today show.

About £165m has so far been recovered and distributed to those who lost money when MG Rover collapsed.

Most of those who lost jobs have received about £600 each.

One of the biggest recoveries of money involves reclaiming VAT that was overpaid when cars made at Longbridge were sold, BBC Midlands Today business correspondent Peter Plisner said.

He said if it could be recovered, it may mean £56m being shared out amongst creditors including former workers.

Rob Hunt, of PricewaterhouseCoopers, said BMW "have got the right to appeal"

Original administrator Rob Hunt, of accountancy firm PwC, said it had made a claim for VAT "that we believe is due back to the company" but BMW had also made a claim and the matter was being resolved through VAT tribunals.

In a statement, BMW Group said it was "for the courts to decide if we are the right party to reclaim the VAT in question" and it would "abide by their ultimate decision".

Analysis

Peter Plisner - BBC Midlands Today business correspondent

Nothing was ever going to be simple when it came to dealing with the MG Rover collapse.

The administrator admits it is one of the most complex cases he has ever worked on.

The fact that he is still working on it, a decade on, is testament to that.

But the other reason he is still there today is the need to recover debts owed to MG Rover, including the overpaid VAT.

If that does end up being recovered, then former workers could be in line for a payout in excess of £300 each. If BMW is awarded the money, they will probably end up with nothing.

A former union convenor at Longbridge, Adrian Ross, said he believed BMW "now should do the honourable thing"

Adrian Ross, a former union convenor at Longbridge, said BMW was a firm "making billions of pounds profit" and £56m was "just a drop in the ocean to a company of their size".

He said: "I believe BMW now should do the honourable thing and any money that they would receive if they were to get this VAT refund should be returned to the creditors i.e. the former workers."