HMRC’s position on adequate remedy and compound interest payments following the Court of Appeal decision in Littlewoods Retail Ltd and others which was handed down in May 2015 is set out in Brief 9 (2015). Not unexpectedly, HMRC do not agree with the decision and are seeking leave to appeal to the Supreme Court.

In this long running case Littlewoods had overpaid over £200 million in VAT between 1973 and 2004. HMRC repaid this with simple interest. Littlewoods claimed compound interest was due which would mean a payment of over £1 billion from HMRC. The recent Court of Appeal decision Littlewoods Limited and others [2015] EWCA Civ 515 has now upheld the 2014 High Court decision that Littlewoods has a right to compound interest.

The Brief confirms that HMRC are of the view that like the High Court’s earlier ruling this finding was based on the ‘exceptional’ circumstances specific to the Littlewoods claimants. In HMRC’s opinion it does not provide a clear basis that could be applied to other claimants or a formula for doing so. Thus it is HMRC’s view that no payments are due to other VAT compound interest claimants at this stage.

In view of the above, HMRC will apply for any claims for compound interest already lodged (and new claims) with the High Court or County Court to continue to be stayed pending the final determination of the Littlewoods litigation. Any new requests for compound interest will continue to be refused.

HMRC will reconsider their position in the event that permission to appeal to the Supreme Court is not granted. Whether or not leave to appeal is granted is not likely to be known until October or November later this year, due to the summer recess.