VAT: Whether interest may be Compounded
In Littlewoods Retail Ltd v HMRC (No 2) (Ch D – 20 May) several retail companies claimed a repayment of VAT on the basis that commission which they paid to agents should have been treated as a discount.
Customs accepted the claims in principle (while disputing the amounts of the claims) and made repayments with interest under VATA 1994 s 78. The companies took proceedings in the QB contending that the effect of the HL decision in CIR v Sempra Metals Ltd [2007] STC 1559 was they should be entitled to compound interest and that VATA 1994 s 78 which provided for simple interest rather than compound interest was incompatible with the principles of EU law.
The Ch D directed that the case should be referred to the ECJ for guidance on whether VATA 1994 ss 78 and...
