Littlewoods reclaims £1bn in overpaid VAT
Monday January 4, 2010
UK retailer Littlewoods is seeking around £1 billion in VAT refunds from tax authority HM Revenue and Customs (HMRC), it has emerged.
The company, which is now part of Shop Direct, is claiming the amount as part of a court case in which the government is alleged to have breached European Union law more than ten years ago, the Financial Times reports.
The claim is centred on the argument that VAT refunds should be calculated using compound interest instead of simple interest.
Littlewoods’ claim alone would represent one-fifth of the £5 billion HMRC has set aside for tax refunds.
Leslie Allen, head of tax litigation at law firm DLA Piper, said there are a number of other large claims up to the value of £600 million.
"We think there are a few thousand claims in the High Court, including a large number from local authorities," he told the FT.
Last month, major bingo operator Rank launched a claim for £16 million in overpaid VAT from HMRC.
Click to see our VAT services