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Taxpayers finally to receive commercial restitution

If you have submitted VAT refund claims in the past, you may be due additional interest payments following a recent High Court decision.

HMRC have always paid simple interest on VAT refunds. This position came under threat following the Direct Tax case “Sempra Metals” which ruled that taxpayers should receive interest on a compounded basis.

A number of car dealers who had received refunds on demonstrator cars, went to the High Court (Group Litigation Order) to request that compound interest be paid.

The Court recently ruled that compound interest should be paid. However, the car dealers’ claims were out of time under statutory time limits.

There is also a separate VAT tribunal case to be taken by British Telecom on the same issue. This case is due to be heard in June.

Businesses which have had claims paid with interest in the last three years should now consider whether to submit further claims to HMRC for compound interest.  Compound interest can amount to three or four times the original claim.

Businesses which have been paid claims going back more than 3 years (under the Fleming case ) may also be entitled to compound interest. Professional advice should be sought as this is a complex issue.


Comment on this blog in the space provided below, or visit my profile for details of how to contact me.

Jane Stacey is a VAT Manager at Mercer & Hole.



Date: 18th May, 2009
Author: Jane Stacey


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