The recent decision in Littlewoods Retail confronts the problem of when compound interest is payable on overpaid VAT, while recognising the exceptional nature of that case, writes Michael Conlon QC
The core issue in the lengthy judgment in Littlewoods Retail Ltd and others v HMRC [2014] EWHC 868 (Ch) is whether the claimants were entitled to compound interest on VAT overpaid to HMRC over long periods. The claimants are mail order companies. Their agents earned commission on their own purchases (AOPs) and on purchases made for their third party customers (TTPs). Commissions could be applied to AOPs or taken in cash. The overpayment claims related to the VAT treatment of TTPs and derived from directly effective EU law rights. HMRC eventually repaid the principal sums of VAT together with statutory interest under VATA 1994 s...
