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Offline TopCat  
#1 Posted : 01 April 2014 14:44:34(UTC)
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Two impportant tax case rulings issued last week I believe...

Corporation Tax

The Corporation Tax case about corporation tax being due on the vat refunds? that was lost by the Barclay Brothers in a ruling issued Thursday 27 March 2014?

Shop Direct, Littlewoods’ parent company lost the tax case against HMRC over whether it would have to pay corporation tax on VAT repayments last Thursday.

Does anyone know if this ruling is available online yet? Can see it on bailli.org yet?

Compound Interest

Ruling issued Friday 28 March 2014 awarding compound interest to Littlewoods (Barclay Brothers).

Shop Direct Ltd of which Littlewoods is now part said in a statement

“The judgment provides a clear and robust resolution to complex issues raised by English and European law,” Littlewoods, now a unit of the Barclays’.

The HMRC said in a statement that it would appeal the ruling, meaning the legal process could drag on for several more years.

“We think today’s decision is at odds with how Parliament intended VAT law to work,” HMRC said.

The case is: Littlewoods Retail Ltd. and ors v The Commissioners for Her Majesty’s Revenue & Customs, Chancery Division, High Court of Justice, HC08C03780 and 03781 I believe...

Any help appreciated...

TC
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Offline Mike  
#2 Posted : 08 May 2014 11:26:16(UTC)
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Thanks: 2 times
TopCat

The Littlewood ruling regarding compound interest being awared to Littlewoods can now be found on Bailli.org here http://www.bailii.org/ew/cases/EWHC/Ch/2014/868.htm

Hope that helps.

This could have very wide implications is my guess.

Mike
Offline Tax  
#3 Posted : 21 August 2014 14:33:25(UTC)
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TopCat and Mike

This is long running case of Littlewoods Retail Ltd is not over yet.

HMRC have been given right to appeal 9 out of the 10 key points in the Littlewoods ruling.

Some compound interest claim Tribunal cases are also stood over pending the ruling in John Wilkins & Others which is in turn stood over pending appeal hearing in Littlewoods Retail Ltd.

HMRC issued a Revenue & Customs Brief 20/14 entitled "HMRC' position following the High Court Judgment in Littlewoods Retail Ltd and Others".

So if HMRC fail at appeal the compound interest is still accruing...

However HMRC state at the end of the Brief 20/14...

"Claims for compound interest

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

HMRC’s position in relation to Tribunal appeals is unchanged, namely that these should continue to be stood over until there has been a final determination as to the availability of compound interest in the United Kingdom.

Any new requests for compound interest will continue to be refused.

HMRC will reconsider their position in the event that their appeal to the Court of Appeal is unsuccessful."


NOTE - that HMRC only say they will "reconsider their position" in the event that their appeal to the Court of Appeal is unsuccessful....

The tone of HMRC's closing comment perhaps suggests that even if HMRC lose the appeal they will be trying to find other ways to wriggle out of paying compound interest.

The saga continues...

Tax.
Offline TaxGuru  
#4 Posted : 16 April 2015 10:53:52(UTC)
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TopCat, Mike, Tax n all

HMRC were given leave to appeal the Littlewoods High Court ruling in 2014 following previous CJEU ruling with the High Court in summary ruling at least partly in favour of the claimants.

HMRC wanted to seek right to appeal the decision in March 2014.

My understanding at present is that:

Quote:
HMRC granted leave to appeal to Court of Appeal. Hearing listed for week commencing 23 March 2015


I have not found confirmation of this quote myself yet to confirm if this Appeal Court hearing has taken place or been deferred again to a later date.

Potentially the next stage of the Compound Interest saga is about to take place with HMRC appealing the High Court ruling in 2014.

With the amounts involved it was inevitable I think that HMRC / The Government were going to fight this all the way for as long as they can.

TG

Offline Scooby  
#5 Posted : 23 April 2015 09:49:02(UTC)
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TopCat n All

I am following this discussion about the Littlewoods compound interest claim appeal and history.

Useful discussion forum thanks for sharing your knowledge and thoughts!

Appreciated

Scooby
Offline TaxGuru  
#6 Posted : 28 May 2015 10:05:40(UTC)
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All,

The latest in this saga is that in May 2015 the Court of Appeal has unanimously ruled in favour of Littlewoods.

The latest Littlewoods compound interest claim hearing was on 24th - 27th and 30th March 2015 with the ruling issued on 21 May 2015.

The full Court of Appeal 21 May 2015 ruling on Littlewoods compound interest is on Bailii.org

Quote:
Conclusion and disposition
209.We are not persuaded that Henderson J fell into any error on any of the issues which we have been asked to decide. For all the above reasons, therefore, we dismiss HMRC's appeal and Littlewoods' cross-appeal.


The decision of the Court of Appeal confirms the decision of the High court in 2014 in favour of Littlewoods.

However it seems that HMRC will seek leave to appeal the Court of Appeals decision to award compound interest to Littlewoods up to the Supreme Court.

As the compound interest for Littlewoods amounts to around £1.2 BILLION HMRC respond is unsurprising. HMRC are quick to accuse and slow to apologise.

Interestingly HMRC has made provision for over £5 Billion it expects to pay out for litigation it expects to lose in the next five years.

Although members of the public might be tempted to think this is excessive it is actually demonstrates quite powerfully two things I think.

Firstly that the law in the UK is extremely complex and vague on many many important and basic issues that affect taxpayers.

Secondly, as I have long said HMRC is an organisation "unfit for purpose".

The long standing culture within HMRC largely to blame for why the Government is now quite possibly going to have to fork out the £1.2 Billion Littlewoods claim together with claims held over and sitting behind this ruling as well.

HMRC often try and argue an aspect of the law in their favour which it is far from clear they are right on.

I say, well done to Barclays for having the guts and resources to take on the bully boys (and girls) at HMRC that I am sure most if not all tax professionals have come across within HMRC fairly regularly.

HMRC spend a lot of their time spouting rules and guidance that is flawed.

When HMRC get it wrong they ABSOLUTELY need to be put in their places and made to pay for their incompetence. MAYBE then HMRC will start treating many businesses and individuals much more fairly and reasonably.

I sincerely hope that Barclays win at the Supreme Court and that the judge heavily criticises HMRC for its dragging this issue out for such a long time.

Maybe then Government will finally realise that tax law need to be clear and also that HMRC is an outdated and unfit for purpose organisation in a modern world.

HMRC have reported said that in their opinion the Court of Appeal ruling and effectively the previous rulings of the Courts in favour of Barclays is "
Quote:
at odds with how parliament intended the [VAT] law to work and will now seek leave to appeal to the Supreme Court
".

I think however HMRC need to but put in a position where they have to cease the complacent approach to tax law they often follow and they think that they are beyond or above the law and can make it up as they go along.

In reality the fact is that HMRC are the ones that are going to cost the exchequer and taxpayers generally the £1.2 billion plus in compound interest (plus no doubt millions and millions in legal fees) as it is HMRC that incorrectly enforced VAT in the first place over a couple of decades!

Shame on you HMRC on both counts. It is about time you apologised to Parliament, Littlewoods, other claimants and the public generally and get your organisation fit for purpose going forward (or get replaced by an organisation that can).

Simple example tax codes any better after RTI? Yeah right, just as messed up as before.

Another example I sat with a taxpayer yesterday twice trying to speak to HMRC to correct a stupid tax coding error.

The first call listening to music on hold waiting to get through to took 28 minutes. the agent help line would not speak to me as it was someone I was helping who is not a client.

The second call took 33 minutes of listening to on hold music to get though to a person to correct HMRC's stupid coding error with under RTR should never have had to happen (or in this case even before RTI came in.

Disgrace.

TG

Edited by user 28 May 2015 10:07:11(UTC)  | Reason: typo

Offline TopCat  
#7 Posted : 28 May 2015 13:09:13(UTC)
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TG (and others)

In the Court of Appeal 21 May 2015 ruling dismissing HMRC's appeal the summary also includes the following comments of the Judges.
Quote:

208.We have not been taken in argument to the underlying expert evidence of the eminent economists which it is said would have caused Vos J to make his finding. We do not, however, consider that we should ourselves go further into the question whether the finding of Vos J should be set aside. HMRC base their case on the later reasoning of Henderson J. Our short answer is that this type of appeal is not open to HMRC. HMRC seek to ride on the coattails of the judge rather than follow the normal process of adversarial litigation. They should have adduced the evidence, which persuaded Henderson J, at the earlier hearing before Vos J or have applied on this appeal to adduce that evidence now and/or appealed the finding of Vos J at a much earlier stage. HMRC has taken none of those steps. We do not see why HMRC should have a second bite of this particular cherry at this late stage in this unprecedented way simply because of some helpful comments made by Henderson J at the later hearing. This is not a permissible shortcut. In any event, in considering the strength of his reasoning, now adopted by HMRC as part of their reasoning, we would have to take into account Henderson J's further observations in FII. We therefore answer this issue as framed by the parties that this issue is not one which can be raised on this appeal.


What you say about HMRC often trying to make up the rules as they go along is sooooo true.

It is shocking though that they seem to have behaved pretty badly in front of the Court of Appeal in the way they have approached the Littlewoods case. It smacks of desperation.

Unless there is political interference because of the amount of money HMRC is going to have to pay out (cynical am I?) it is hard given previous rulings and added to that the poor way HMRC has put their argument forward (see Judges comments in the quote above from latest ruling), it is hard to see how the Supreme Court could rule any different to the High Court and subsequently the Appeal Court.

Unless of course HMRC can belatedly deal with this case properly or rather come up with a more concrete approach and argument. The judges comments about HMRC "HMRC has taken none of those steps" is pretty damning of HMRC.

Will HMRC smarten up their act? Unlikely based on the past more likely just through the their dummy out of the pram as usual?

Just maybe HMRC will not be granted right of appeal to the Supreme Court in view of the two previous rulings and the quite critical comments of the judges in the summary of the ruling.

TC
Offline TaxGuru  
#8 Posted : 02 July 2015 11:24:01(UTC)
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HMRC's latest announcement about the Littlewoods case is Revenue and Customs Brief 9 (2015) issued 23 June 2015 which includes HMRC latest announcement regarding the Littlewoods case.

In it HMRC state:

Quote:
HMRC does not agree with the judgment and considers it to be at odds with the requirements of European law and how Parliament intended VAT law to work. Accordingly, this is not the end of the litigation as HMRC is seeking permission to appeal to the Supreme Court. It may, however, be a number of months before HMRC will know the outcome of its application for permission to appeal.


The Brief also includes HMRC summary of the background, High Court judgement and Court of Appeal Judgement and more details about HMRC stated current position.

With regards to claims for compound interest HMRC's brief states:

Quote:
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.

HMRC position in relation to Tribunal appeals is unchanged, namely that these should continue to be stood over until there has been a final determination as to the availability of compound interest in the UK.

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.

An update to this brief will be issued in due course.


The saga continues.

Tax Guru

Edited by user 02 July 2015 11:25:40(UTC)  | Reason: added date Brief 9 was issued...

Offline TaxGuru  
#9 Posted : 29 October 2015 15:36:02(UTC)
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Hi All

Latest news again on this is going to cause (in my opinion) a whole new set of Court Battles!

Following HMRC losing the latest hearings to do with Littlewoods HMRC (Government) in now proposing a 45% Corporation Tax charge on "restitution interest".

It seems as though the Government and HMRC are gearing up to finally admitting they were wrong and accept they have lost their battle to not have to pay Compound Interest in certain cases with the release a new Clause 8 in the 2015 Finance Bill - Restitution interest payments.

As they seem to realise that they may have to face up to losing their battle, instead they will seek to recover 45% of the payouts as a tax charge.

Arguably this is a retrospective tax charge as by very nature Compound interest is a "reward" or compensation for HMRC error "restitution interest" to the recipient.

The new rule was not in existence when the compound interest was effectively accruing over previous years and I think it quite likely that Littlewoods and the Barclay Brothers (plus others) will again be taking HMRC and the Government through the courts as to the legitimacy of the proposed new 45% tax charge.

The court saga around compound interest and related matters it seems will be continuing for many more years to come!

TG
Offline TaxGuru  
#10 Posted : 23 December 2015 11:22:43(UTC)
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All

HMRCs latest statement on the Littlewoods saga still appears to be their Revenue and Customs Brief 9 (2015): HMRC position following the Court of Appeal judgment in Littlewoods Retail Ltd and others

As far as I can tell leave for HMRC to appeal to the Supreme Court has neither been granted or refused yet.

Does anyone else have an update on this.

I am involved in a Tribunal case which HMRC are contending has to remain stood over behind John Wilkins and others.

HMRC's Brief 9 (2015) ends:

Quote:
Claims for compound interest
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.

HMRC position in relation to Tribunal appeals is unchanged, namely that these should continue to be stood over until there has been a final determination as to the availability of compound interest in the UK.

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.


Although I think it is questionable the HMRC are correct continuing to seek to standover Tribunal claims until John Wilkins and Others is heard and rules in view of the fact that HMRC has lost all the court decisions up to the High Court ruling to me this seems wrong.

Question is has HMRC actually submitted a request for Supreme Court appeal?

If they have has it been granted yet? If they have not why not and therefore I think they are just trying to fob John Wilkins and other cases still stood over at tribunal off endlessly.

HMRC are clearly worried in view of the fact they are now seeking to tax "restitution interest" so likely believe they will not ultimately win at the Supreme Court either and their case/argument is flawed.

Anyone know if John Wilkins is now due for hearing?

and/or is HMRC have applied for and been granted or refused right to appeal to Supreme Court?

TG
Offline TaxGuru  
#11 Posted : 05 January 2016 10:42:17(UTC)
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23 December 2015 - Supreme Court grants HMRC right of appeal of the Littlewoods Case and cross appeal.

Quote:
Permission to appeal decisions by UK Supreme Court

23 December 2015

Permission to appeal decisions on Littlewoods' £1bn Tax dispute and a case relating to whether abortion services should be made available to women ordinarily resident in Northern Ireland.

1. Littlewoods Limited and others (Appellants) v Commissioners for Her Majesty's Revenue and Customs (Respondent) UKSC 2015/0177
Littlewoods Limited and others (Respondents) v Commissioners for Her Majesty's Revenue and Customs (Appellant) UKSC 2015/0178

On appeal from the Court of Appeal Civil Division (England and Wales)

The Supreme Court has granted applications by Littlewoods and HMRC in an appeal and cross-appeal relating to Littlewoods overpaid VAT to HMRC. HMRC have now repaid the principal sums together with simple interest at the rates provided for under s. 78 of the Value Added Tax Act 1994 ("VATA"). Littlewoods seeks to recover in restitution the time value of the principal sums (in compound interest) which it claims exceeds the simple interest available under VATA by a sum of £1 billion.

The Court of Appeal judgment being appealed is available here:
•[2015] EWCA Civ 515


It is difficult not to be cynical....

TG
Offline TaxGuru  
#12 Posted : 16 January 2018 09:38:06(UTC)
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Hi All

For anyone that has been following the Littlewoods claim for "compound interest"..

The Supreme Court in the UK has issued it's judgement on Littlewoods claim on 1 November 2017

Quote:
Conclusion
74. We would dismiss Littlewoods’ cross-appeal on issue 1 and allow HMRC’s
appeal on issue 2. We would invite the parties, in the absence of agreement, to lodge
written submissions on the appropriate form of order to be made in this case within
21 days of the handing down of this judgment.


i.e the same treatment as HMRC expects of taxpayers.

Quote:
72. Consistently with a widespread practice among member states of the EU, the
United Kingdom has treated the award of simple interest as an appropriate remedy
for being held out of money over time whether the claimant is HMRC, when a
taxpayer fails to pay his tax in a timely manner, or the claimant is the taxpayer, when
tax has been unduly levied.


You have to wonder, perhaps even presume! that if Littlewoods HAD won this case whether the knock on effect would have been that taxpayers paying any tax late would have then been required to pay compound interest on late paid tax, in tax enquiry cases going back a number of years this would have dramatically increased the over settlement costs for taxpayers, even if the late payment arose for say "innocent" errors or HMRC taking a different view on the interpretation of a complex on unclear aspect of the law.

With an extremely complex "self assessment" tax system in the UK which places a lot of burden on taxpayers compound interest would no doubt have bankrupted many more taxpayers having to pay back taxes late.

Had Littlewoods succeeded it could have not only proved extremely costly for the UK Government as compound interest would have been substantial.


In a case I have been involved in even simple interest over the 20 odd years tripled the tax refund. Compound interest I calculated would have approximately doubled the original refund that included simple interest!.

I think that will be it now as far as claims for compound interest are concerned and I think many will think the ruling a reasonable concluding the the issue.

What a saga that claiming and various rulings along the way has been !

So Littlewoods loses it's claim for Compound Interest and the various, numerous other cases being held over in the background pending this ruling by the Supreme Court which will now fall as a consequence.

TG

Edited by user 16 January 2018 09:40:58(UTC)  | Reason: minor edit

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