21 November 2017 
Andrea Marshall, Tax Specialist
It looks as though the argument for compound interest has finally been quashed by the Supreme Court in the Littlewoods decision. With £1.25bn of compound interest at stake on Littlewoods' claim alone (on tax of only £205m) with plenty more stood over behind this decision, the stakes for this court action were high, and it has already been to the Court of Justice of the European Union (CJEU), back to the UK's Court of Appeal (where Littlewoods won) and now, finally, to the UK's Supreme Court. The Supreme Court has decided that Littlewoods claim for restitution was prevented by the UK's specific provisions for statutory interest (s78, VATA 1994) and that Parliament had intended this to be the only route for obtaining interest. The court also determined that there was no right in EU law to compound interest - while the CJEU's judgment in Littlewoods had endorsed a general entitlement to interest, it was left to Member States to determine whether that should be simple or compound as long as it was an 'adequate indemnity'. The Supreme Court felt that the CJEU had indicated that simple interest (of £268m) was reasonable redress, and that various other Member States award simple interest as well.
Several years ago, some taxpayers had submitted tribunal claims to stand behind Littlewoods and others had registered High Court claims (and there were certainly some universities making High Court claims in 2009). There is a small possibility that another taxpayer with a tribunal appeal stood over pending the outcome of this case may go forward to seek another reference to the CJEU, but with the Supreme Court stating that no further reference is necessary this seems unlikely. It seems that any universities with High Court claims stood over behind Littlewoods can no longer pursue those claims. If your university had some kind of claim stood over behind Littlewoods and your advisers haven't been in touch, it would be worth checking with them what your position is.
