Totel v HMRC

Cathya Djanogly

In Totel v HMRC [2018] UKSC 44 (26 July 2018) the Supreme Court confirmed that the ‘pay-first’ requirement which applies to traders appealing against VAT assessments is not contrary to EU law.

Totel was liable to pay nearly £1.5m of VAT which HMRC considered it had wrongly treated as input tax in its VAT returns and it had appealed against HMRC’s determination. Totel contended that the prepayment rule (under which it had to pay the contested VAT before appealing) infringed the EU equivalence principle as described by Lord Hope in Test Claimants in the FII Group Litigation v HMRC [2012] 2 AC 337: ‘The principle of equivalence requires that the rules regulating the right to recover taxes levied in breach of EU law must be no less favourable than those governing similar domestic actions.’

The Supreme Court found that the Court of Appeal had been correct to conclude that...

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