I wonder how this will be spun

One of Britain’s most famous retail names has lost a legal battle to recover £1.25 billion in interest on overpaid VAT after five Supreme Court justices unanimously dismissed the claim.

Well, yes, it’s a victory for HMRC.

But here’s the underlying point. No one at all doubts that HMRC took too much in VAT. The only question was which interest rate should apply to the repayment. The specific law said one low one, common law might indicate something higher. Without getting too complex about it, the lower one applies.

OK, fine.

But I do wonder how you know who is going to regard this.

33 thoughts on “I wonder how this will be spun”

  1. I suspect he may say that it serves them right as the retailer will no doubt be guilty of tax avoidance (in what passes for the mind that Dick tater possess) in another area of the business.

  2. And how dare they tie up HMRC’s scarce resources with this frivolity? Can’t they just pay their taxes like everyone else?

  3. Dongguan John – no, they pay much less than they charge.

    I’m currently negotiating a relatively complex case with HMRC: we’ve agreed (without prejudice) that PAYE should have been accounted for by the company and so was underpaid, but income tax was paid by the individual on the same amount when in fact it shouldn’t have been, so in fact HMRC aren’t out of pocket.

    The net interest due on this difference of nil is, according to HMRC, somewhere north of £10k.

    I am resisting this suggestion 🙂

    The situation is not helped by the PAYE officer’s insistence that we should pay over the PAYE first, and only then start talking (to a different part of HMRC) about getting the income tax repaid… Nope, nope, not happening.

  4. “Dongguan John

    Is the interest they pay when they overcharge they same as they demand when you pay late?”

    No.

    Since September 2009 the HMRC late payment rate is 2.5% and the repayment rate is 0.5%

    And if you think that’s bad, in January 2009 the rates were 3.5% and 0%.

  5. How much is the VAT that was overpaid?

    Commercially the percentage commonly used for interest is 8% last I looked.

  6. Can you stop linking to paywalled articles please? There must be somewhere else this case is detailed on the net, why pick the one some of us can’t read??????

  7. The VAT at stake was just north of £200m from memory, and simple interest in this was just north of £250m (again from memory). But as this dates back to the 1970s and 1980s the actual fair value of the loss to Littlewoods was agreed by the courts as being significantly higher.

    In fact, the court agreed that the interest paid represented just under 25% of the loss to Littlewoods, but decided to find that this represented “adequate” restitution.

    Bastards. The only justification for the ruling I can see is the government stood to lose a shit-load of cash. The law is an ass and the 5 who delivered this verdict (which went against all the lower courts) are asses.

  8. The Headline is wrong, it should be ‘Five Judges finally recognise which side their bread is buttered on’, the point being that the Judiciary is an arm of government. Remember that the next time they support a RoPper’s rights to live in the UK, raping and murdering, just because he has a cat.

  9. @Rob
    >Can you subtract a real number from an imaginary one?

    Yes you can, you end up somewhere in the top left quadrant of the z-plane. That is a complex number with a positive imaginary component and a negative real component. something like {2i, -3}

    But I don’t think that’s what you were asking.

  10. Yes you can, you end up somewhere in the top left quadrant of the z-plane. That is a complex number with a positive imaginary component and a negative real component. something like {2i, -3}

    That will still be more real than Murphy’s “tax gap”.

  11. The situation is not helped by the PAYE officer’s insistence that we should pay over the PAYE first, and only then start talking (to a different part of HMRC) about getting the income tax repaid… Nope, nope, not happening.

    Does he also work part-time as an EU negotiator?

  12. Considering this involves a business which

    HMRC stiffed for hundreds of millions
    is owned (along with the hated Torygraph) by billionaire residents of tax havens
    charges interest to lowest tier of society and perpetuates wealth gap
    promotes unnecessary spending by consumers, until recently even using glossy catalogues

    I imagine this represents several months worth of wet dream material here for the resident of the unimpressive end terrace in Ely

  13. “The Headline is wrong, it should be ‘Five Judges finally recognise which side their bread is buttered on’, the point being that the Judiciary is an arm of government.”

    This in spades. The judiciary will never ultimately enforce the law, if doing so threatens the very existence of the State, or to weaken it considerably, which a ruling like this would have – billions would be owed to other claimants at a time when the State is short of cash. So they’ll say black is white, safe in the knowledge there’s fuck all the peasantry can do about it, the State has the guns at the end of the day, and thats what the judges hide behind.

  14. I wonder if they can offset the loss against future tax bill? That would be interesting.

    Equally provisioning for future theft.

  15. @ Jim
    No, the judges are pronouncing on the law passed by Parliament. This is nor (in this and many other cases) justice but we have seen on many occasions that theSupreme Court is willing to spit in the government’s eye. (Remember Gina Miller?)

  16. Murph does not thus far appear to have written anything on the point. I wonder if this is an example of his being warned off by one of Tom’s posts.

    [feel free to file this comment under Hostages to Fortune]

  17. “we have seen on many occasions that the Supreme Court is willing to spit in the government’s eye. (Remember Gina Miller?)”

    Spit in the governments eye yes, but never hack away at its foundations. Of course they’ll find in favour of a leftist notion that they 100% agree with, but they won’t fundamentally decide against the very basis of the State, because that is what gives them their power in the first place.

  18. Spud comments.

    He made a TV program about the Barclay Brothers.

    The BBC might have had a little bit to do with it.

    A coincidence that years later HMRC won its VAT case? I think not.

  19. Er, Jim – for lawyers to hack away at law is almost (but not quite) comparable to mathematicians saying 2+2=5.
    Anarchists hack away at the foundations of the not lawyers.

  20. “For lawyers to hack away at law is almost (but not quite) comparable to mathematicians saying 2+2=5.
    Anarchists hack away at the foundations of the not lawyers.”

    No-one is asking for lawyers to hack away at the law, just to uphold it, even if it does hack away at the State.

  21. Regarding the learn’d Mr Lud’s comment; The judges know which side their bread’s buttered. The legal profession believe they own the law & don’t wish to be deprived of ownership. They’ll buck government, but not hazard the continuance of the status quo. They are the Establishment. Politicians mere mayflies.

  22. Does HMRC justify why they charge more in interest than they pay or do they arrogantly refuse to do so?

  23. @ John Dongguan

    Well to defend an organisation I used to work for, I don’t think they have any say in the matter. If HMG decided to charge 0.5% and pay 25% (or vice versa) then that’s what HMRC would do.

    But I’m not aware of an official explanation.

  24. “HMRC is not a bank” is what I’ve been told – you shouldn’t expect to get a decent return on lending cash to them.

    This does seem odd. I once worked with a large multinational which had a ten-figure sum on deposit at a group treasury company, denominated in Euros and getting something like 0.5% interest. I suggested that they should pay over a billion or so in extra corporation tax above what they were actually due to pay, which would have a) earnt the UK company more interest on the overpayment than they were getting on the deposit and b) provided a wonderful PR opportunity. But for some reason the parent company weren’t keen… 🙁

  25. Hmm.. It seems that TW and most of the commenters here have little comprehension of the tax system. Contrary to what TW says the issue was not the “question … which interest rate should apply to the repayment.”

    The question was whether the interest should be simple or compound (this is nothing to do with the rate of interest). And yes HMRC apply simple interest to both to money owing and money owed.

    To those on this site wishing to read the full judgement here is the link:

    http://www.bailii.org/uk/cases/UKSC/2017/70.html

    But I don’t t suppose the tiny minds on here would be able to understand it.

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