Wednesday 16 September 2009

Simple Interest

Simple!
The Times has reported the result of the first adjudication issued by the new Upper Tribunal for Tax Matters.

Companies waiting to receive refunds from HM Revenue and Customs for VAT they overpaid because of errors made by HMRC will only receive simple interest on the debt in the first instance, instead of the compound ineterst that they have demanded.

The Upper Tribunal for tax matters said that although the businesses had the right to compound interest on their reclaims under EU law, UK statute did not oblige HMRC to pay it.

Instead, the businesses will receive simple interest from HMRC and have to bring a further claim in the High Court for that to be topped up to compound rates.

Thus wasting further time and money, as the companies will quite correctly claim something that is their right and will of course receive it.

Tax does have to be taxing.

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2 comments:

  1. "the companies will quite correctly claim something that is their right and will of course receive it."

    You're exceptionally sure of this one, aren't you Ken? Are you willing to put your money where your mouth is? I'll bet you £100 that the companies don't win at the court of appeal!

    Obviously I'm in danger of breaking anonymity here, so lets say that if you accept the bet and any one of the 5 companies who are party to this case appeals to the CoA and wins, or HMRC doesn't contest any of the companies' appeals to the CoA, I'll pay £100 to a charity of your choice.

    If you accept and none of these 5 companies successfully appeals to the CoA, then I'd be grateful if you'd donate £100 to the Tax Justice Network.

    (Bear in mind I'm being generous here. I need HMRC to win all 5; you only need one of them to win!)

    Don't get me wrong. I fully accept that there's a very significant chance that I'll lose this bet. The CoA has frequently overturned High Court (which the upper tribunal effectively replaces) decisions in tax cases. However, I believe that your apparent confidence in the eventual outcome of this case is so misplaced that I'm prepared to take the risk!

    If anyone expresses an interest, I can explain why I think the issue is far more complex than Ken makes out. However, I'm not going to go into details in this post for fear of being criticised (again) for writing long posts - some seem to feel that complex issues can always be discussed adequately in a couple of hundred words. One thing I can't resist picking up on, though:

    "Thus wasting further time and money"

    What you (deliberately or otherwise) omitted to mention is that there are a large number of cases following this one, with massive amounts at stake between them. The legal costs of getting certainty on this question one way or another pale in comparison.

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  2. But when you owe them isn't that also flat rate? It used to be anyway.

    ReplyDelete