HMRC vs Littlewoods

HMRC has lost a High Court case against retailer Littlewoods, and will have to pay Littlewoods £1.2BN in compound interest on VAT overpayments made by Littlewoods between 1973 and 2004.

Lawyer Giles Salmonds said the ruling by Mr Justice Henderson could have significant implications, because it takes into account the interest's increased (or compounded) value over the years. He is quoted by ITV:

"Littlewoods claimed that based on principles of EU law they were entitled to the compounded use value of money they had paid to HMRC as VAT.

Today's judgment means that HMRC will be liable to pay billions in interest to other taxpayers who have already claimed overpaid VAT going back to the early 70s, but have only been paid simple interest based on a reduced average of bank base rates."

However, before those owed money rush off to make a claim, it is highly likely that HMRC will appeal the verdict. As per Mr Salmonds:

"This is an important victory for taxpayers, but it is very likely that HMRC will seek permission to appeal to the Court of Appeal."

Tax does have to be taxing.

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