In the latest round of the simple or compound interest argument and in its first case, the Upper Tribunal (Tax and Chancery Chamber) has overturned the recent decision of the ECJ, the House of Lords and the High Court about how interest on overpaid tax should be calculated. On this occasion, the Tribunal ruled in favour of HM Revenue & Customs, agreeing that the use of the term “interest” in UK legislation should be taken to mean simple interest “…in accordance with the ordinary principles of domestic law…”.
The case was taken by a group of 5 independent motor dealers who had claimed overpayments of VAT plus interest on certain bonus payments and sales of demonstrator vehicles since 1973; John Wilkins (Motor Engineers) Ltd, John Pudney Ltd trading as Horsham Car Care, Squire Furneaux Group, Robmar Ltd trading as Worthing Kia, Lookers plc, Upper Tribunal Tax and Chancery Chamber.
We will post further information on this issue as it becomes available, particularly whether or not the traders concerned are likely to lodge an appeal against the decision and HMRC’s response.