Littlewoods Limited and others v Commissioners for Her Majesty’s Revenue and Customs

Littlewoods Limited and others v Commissioners for Her Majesty’s Revenue and Customs

Sections 78 and 80 of the Value Added Tax Act 1994 create a comprehensive statutory regime for repayment of overpaid VAT and interest, which impliedly excludes concurrent common law claims for compound interest. EU law does not require the UK to pay compound interest or full reimbursement of the use value of money; the provision of simple interest under national law is sufficient provided it does not deprive the taxpayer of an adequate indemnity, which in this case it does not.

Parties
Appellant/respondent: Littlewoods Limited and others; Appellant/respondent: Commissioners for Her Majesty’s Revenue and Customs (HMRC)
Jurisdiction
England and Wales
Judgment Date
01 November 2017
Procedural Posture
Civil Appeal / Supreme Court Judgment on Appeal From Court of Appeal
Outcome
Appeal by HMRC allowed; cross-appeal by Littlewoods dismissed.
Legal Topics
VAT Overpayment, Unjust Enrichment, Interest on Tax Repayments, Limitation Periods, EU Law Effectiveness and Equivalence, Statutory Interpretation
Tax Law European Union Law Restitution VAT Overpayment Unjust Enrichment Interest on Tax Repayments Limitation Periods EU Law Effectiveness and Equivalence +1 more

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Parties

Littlewoods Limited and others

Appellant/respondent

Commissioners for Her Majesty’s Revenue and Customs (HMRC)

Appellant/respondent

Procedural Posture

Civil Appeal / Supreme Court Judgment on Appeal From Court of Appeal

Legal Issues

  1. 1 Whether common law claims for compound interest on overpaid VAT are excluded by sections 78 and 80 of the Value Added Tax Act 1994 as a matter of English law
  2. 2 Whether EU law requires the UK to pay compound interest (or more than simple interest) on overpaid VAT to provide an adequate indemnity for taxpayers

Ratio Decidendi

Sections 78 and 80 of the Value Added Tax Act 1994 create a comprehensive statutory regime for repayment of overpaid VAT and interest, which impliedly excludes concurrent common law claims for compound interest. EU law does not require the UK to pay compound interest or full reimbursement of the use value of money; the provision of simple interest under national law is sufficient provided it does not deprive the taxpayer of an adequate indemnity, which in this case it does not.

Court Disposition

Appeal by HMRC allowed; cross-appeal by Littlewoods dismissed.

Orders

  • Littlewoods’ claims for compound interest are excluded as a matter of English law and not required by EU law.
  • Parties invited to lodge written submissions on the appropriate form of order within 21 days if no agreement is reached.