On 23 June, HMRC published Revenue and Customs Brief 9(2015) which confirms its position following the Court of Appeal judgment in Littlewoods Retail Ltd v Revenue and Customs Commissioners  EWCA Civ 515. HMRC has announced it will seek permission to appeal to the Supreme Court against the Court of Appeal’s decision. The Court of Appeal dismissed HMRC’s appeal against the High Court’s decision that EU law entitled the taxpayer to an adequate indemnity for the loss arising from overpaying VAT, which, in the taxpayer’s circumstances, required the payment to be calculated by reference to compound interest.
HMRC’s policy paper also announced that, pending a decision on the permission, it will apply for any claims for compound interest (this includes claims already issued and new claims) to continue to be stayed pending the final determination of the Littlewoods litigation. Similarly any Tribunal appeals will continue to be stood over pending final determination. HMRC has confirmed it will refuse any new requests for compound interest.
Taxpayers who consider they may be affected by the Littlewoods decision should review their position as a matter of urgency.
Our recent client update on the Littlewoods decision can be read here.
The Revenue and Customs Brief can be read here.