Compound interest is not due

The taxpayers were test claimants in the VAT interest cars group litigation order. They had overpaid VAT in respect of bonuses and sales of demonstrator cars. HMRC had accepted the claim and the VAT was repaid going back to 1973 together with simple interest.

The taxpayers then claimed compound interest should have been paid and they made a claim in restitution. In the High Court in May 2009 the judge decided the claims were time-barred and only simple interest was due.

The taxpayers appealed.

The Court of Appeal said that the High Court judge’s approach in respect of the Limitation Act 1980 s 32(1)(c) was not wrong in law and there was no reason to invoke the EU law principle of effectiveness. Compound interest was not due.

The taxpayers’ appeal was dismissed.

‘This decision is perhaps not...