Dealers have been warned that resolving compound interest claims may take ‘longer than expected’ after the HMRC were given leave to appeal the Littlewoods case at Supreme Court.

The decision to proceed to the Supreme Court follows a Court of Appeal judgement in June last year which was ruled in Littlewoods’ favour over the long running issue of whether compound rather than simple interest should have been received on overpayments of VAT.  

At that time, HMRC indicated that they would be seeking right to appeal.

All motor industry claims continue to rely upon the success of the Littlewoods claim.

Michelle Malone, Tax Director at automotive specialists ASE plc, said: “With potentially millions of pounds at stake, this move is not unexpected, but does unfortunately mean that dealers will have to wait longer for a final resolution to their claims.  We will continue to defend their position with the aim of bringing this to a successful conclusion."

ASE said the fact that dealers’ tax claims are lodged at the VAT tribunal, rather than in the courts, adds further complexity.

Unless the Supreme Court makes a specific ruling on whether claims can also progress at tribunal, it is probable that further litigation will be required once the Littlewoods case has finally been resolved.