The Upper Tier Tax Tribunal released its first decision under the new rules in the leading Tribunal case on Compound Interest, the CIP Litigation. The Tribunal held that Section 78 of the VAT Act 1994 cannot be construed in a manner that allows for compound interest and as a result the Tribunal does not have jurisdiction for such a claim and the entitlement of compound interest must be enforced as a restitution claim.

The CIP Tribunal decision will no doubt be appealed alongside the VIC GLO judgment and the key issues of entitlement and limitation will remain uncertain. The most prudent course of action will therefore be to issue claims in both jurisdictions and stay the claims until the litigation has been resolved.