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No compound interest on VAT repayments

14 November 2017 / Sarah Black
Issue: 4624 / Categories: Comment & Analysis

A case of great interest


  • The Littlewoods case has been closely watched by those who were also seeking compound interest on tax repayments.
  • The CJEU answers failed to clarify the position completely.
  • The taxpayer’s appeals had been upheld in the High Court and the Court of Appeal.
  • Here the Supreme Court held that ‘adequate indemnity’ meant full compensation of the principal and some form of interest.
  • Although this case was in the context of overpaid VAT it is likely that the courts and HMRC will rely on it in relation to direct taxes as well.

Bringing ten years of litigation to a close on 1 November 2017 the Supreme Court issued its decision in Littlewoods Limited and others v HMRC [2017] UKSC 70; controversially this was in favour of HMRC. This is a case that...

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