3 June 2015
The Court of Appeal has allowed Littlewoods’ claim for compound interest on VAT overpaid. It said the UK law could not be read in accordance with EU law and must be ignored. The correct measure of the interest due was to be the use value of the overpaid tax to the government, as determined by the cost of borrowing, rather than the loss to Littlewoods. In addition, the Court also pointed out that its judgment did not imply that all retrospective claims should qualify for compound interest.
It appears that HMRC has already decided to apply to the Supreme Court for permission to appeal further, and the amounts involved are substantial.