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HMRC to appeal £1.2bn Littlewoods VAT ruling

26th Jun 2015
Freelance journalist
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HMRC has asked for permission to appeal against a court ruling in favour of Littlewoods in a £1.2bn VAT dispute about compound interest.

In May, the Court of Appeal backed the home-shopping business, owned by Sir David and Sir Frederick Barclay, in its £1.2bn claim over receiving compound interest on improperly collected VAT.

The dispute goes back more than 30 years.

The Court of Appeal agreed with a 2014 ruling by the High Court in favour of Littlewoods.

Littlewoods said that the High Court ruling [Littlewoods Retail v HMRC], gave a “clear and robust resolution” to complex issues in English and European law.

The ruling means HMRC could be liable to pay interest to other taxpayers who have already claimed overpaid VAT going back to the early 1970s but have only been paid simple interest.

HMRC disagrees with the decision and hopes to appeal against the Court of Appeal’s ruling in the Supreme Court.

It said the judgement is “at odds” with the requirements of European law and how parliament intended VAT law to work.

HMRC said a decision on its appeal may take a “number of months”.

“As HMRC is seeking leave to appeal to the Supreme Court, the availability of compound interest in any circumstances remains in dispute,” it said.


Replies (2)

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By 175alison
29th Jun 2015 18:02

Well they would dispute it
HMRC would charge us the highest rate of interest possible, so when the boot is on the other foot why should they get away with it ?

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By Discountants
30th Jun 2015 12:15

It's not the rate its the compounding of the interest

The £1bn difference is due to Littlewoods successfully arguing that they should be paid interest on the interest balance.

If this is successful we may then see HMRC applying compound interest to taxpayers as opposed to the simple interest it currently uses.

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