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Littlewoods v HMRC

In Littlewoods v HMRC (HC08C03780 – 28 March 2014) Littlewoods successfully sought to recover compound interest (representing approximately £1.2bn) on VAT paid between 1973 and 2004. HMRC had already refunded the principal VAT amount (together with simple interest) which had been wrongly paid in relation to commissions paid to agents who placed orders in the Littlewoods catalogue. Interestingly following the Grattan decision (C-310/11) HMRC now claimed that VAT had actually been due.

The court exhaustively reviewed (and quoted) the proceedings up to then as well as the Grattan decision (which turned on similar facts) and rejected HMRC’s argument that its case was supported by Grattan. However Justice Henderson also noted that he was inclined to find in favour of HMRC in relation to the underlying VAT issue.

Furthermore HMRC was not estopped from raising the issue of liability to VAT. The Caffoor principle...

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