HM Revenue and Customs Brief 5/17 - final judgment in Littlewoods
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Purpose of the brief
This brief explains the position of HM Revenue and Customs (HMRC) following
the Supreme Court judgment in Littlewoods Limited and others handed
down on 1 November 2017.
This withdraws previous Revenue and Customs Briefs 9/2015 and
20/2014 issued about this litigation.
The Supreme Court found in favour of HMRC, ruling
that the statutory interest paid to the claimants is adequate and it
isnít necessary for compound interest to be paid.
The case is now final.
will invite claimants to withdraw their claims and any related appeals
to the Tribunal.
Littlewoods Limited and others claimed a refund of overpaid
VAT for commissions on mail order sales. This VAT was repaid together
with simple interest due under VAT Act 1994. They then argued that the
interest already paid to them was inadequate and that they were
entitled to compound interest both as a matter of EU law and also as a
matter of English domestic law.
view has always been that thereís no community law right or domestic
law right to compound interest and that section 78 of VAT Act 1994
provides an exhaustive statutory scheme by which only simple interest
The Supreme Court heard the case in July 2017 and released its
unanimous judgment in HMRCís
favour on 1 November 2017. This means that statutory interest is
sufficient to comply with EU law.
The Court confirmed that the statutory VAT regime provides an
exhaustive remedy for overpaid VAT and is compatible with principles of
The Court determined that simple interest at statutory rates
is sufficient to vindicate the EU law right to an adequate indemnity.
This litigation is now final.
Claims for compound interest on overpaid VAT or for any
compensatory amounts other than simple interest under the provisions of
the VAT Act 1994 will not be paid. HMRC will invite
claimants to withdraw their claims and any related appeals to the
There are a number of claims where the underlying tax
litigation is not yet final. Those underlying issues should now proceed.
About the Author
© Crown Copyright 2017.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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