Many taxpayers will be disappointed after the HMRC won a landmark case on VAT refunds. The case involved the historical overpayment of VAT by Littlewoods between 1973 and 2004. When the mistake was noticed, HMRC accepted that VAT had been overpaid and repaid Littlewoods £205m plus interest of £268m.

The issue was that HMRC had used simple interest to calculate the interest owed, whereas Littlewoods believed compound interest should have applied. They argued that they were owed a further £1.25bn.

The case has dragged on through the courts for years, but has now been finally settled – with the Supreme Court ruling in favour of HMRC.

Many other taxpayers have made similar compound interest claims, and their cases were essentially on hold until the Littlewoods case was settled. It’s estimated that the total amount of claims resting on the case was over £17bn – which would have had serious implications for the Exchequer.

So it’s good news for HMRC and the Exchequer, and disappointing news for taxpayers with similar claims.

This includes golf clubs who have received VAT refunds on green fees paid by non-members. The refunds have been calculated using simple interest, and will likely not now be increased with any compound interest.

This blog post provides general information only and may not apply to your particular circumstances.

For more information on VAT and VAT refunds, call Johnston Kennedy on
+44 (0) 28 9045 6333 or email
info@johnston-kennedy.com