Companies that have recently received refunds of VAT and simple
interest due to earlier overpayments of VAT to HMRC should consider
submitting claims for a further refund allowing for compound
interest, according to chartered accountants Clement Keys.
Director of VAT Services Steven Simmonds said that whilst HMRC
will reject these claims- businesses should then lodge an appeal
with the Tax Tribunal against that decision. Any appeal is likely
to be delayed - pending a decision by the Court of Appeal on an
appeal brought on behalf of a group of Motor Traders, against a
High Court ruling.
"The action was brought because HMRC would only pay simple
interest on VAT incorrectly collected by them since 1973 and this
was felt not to represent commercial restitution and that HMRC
should have paid, based on European Legislation, compound
interest.
"The Motor Traders won a pyrrhic victory in that Mr Justice
Henderson found that they should have been paid compound interest
and not simple interest but he also ruled that the claims were time
barred because the time limit for making such claims had already
ended before the action had begun
"We understand that Mr Justice Henderson has already granted the
Motor Traders leave to appeal to the Court of Appeal and so the
dispute will continue with perhaps a reference to the European
Court of Justice."
In a secondary joint action, an appeal is due to be heard in
June 2009 by the Tax Tribunal but in view of the High Court
decision and the possible appeal to the Court of Appeal it could be
that this action is put back to a later date.
Businesses that think that they may be entitled to compound
interest should contact their advisor to discuss the position.
Established in 1885, chartered accountants Clement Keys offers a
range of general accountancy and business advice services along
with specialist services in taxation planning, property service
charges, pension schemes, charities and not for profit
organisations, entertainment and sport, AIM and PLUS Markets listed
businesses and European and Local Authority auditing.