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Littlewoods Retail Ltd & others v CRC, Court of Appeal
The taxpayer companies were catalogue-based home shopping businesses.
They overpaid £204m in VAT between 1973 and 2004. HMRC repaid the tax with simple interest. The taxpayers said compound interest should be paid and claimed sums of about £1.2bn.
The matter was referred in to the Court of Justice of the European Union (CJEU) which in 2012 said there was no EU right to compound interest. It was for the national courts to decide which kind of interest should be paid.
The High Court ruled two years later that compound interest was due and the Revenue appealed.
The Court of Appeal said the aim of a repayment of tax paid as a result of an error was not to confer a windfall on the taxpayer or compensate it for its loss.
The starting point of the judgment was to be that “an innocent recipient of an overpayment should...
