Magazine publisher Condé Nast has won a Lords test case, in a landmark ruling which will force the taxman to pay back £100,000 in overpaid VAT to the publisher.
Five law lords have dismissed a challenge by Her Majesty’s Revenue and Customs to an Appeal Court ruling that they are not entitled to impose a time limit on VAT refunds.
The epic legal battle will pave the way for other companies to reclaim back-dated overpaid VAT – which accountancy firm Deloitte estimates could cost in the region of £1bn.
Conde Nast, claimed it was entitled to repayment of overpaid VAT stretching back 20 years. HMRC claimed it was entitled to limit the claim to three years of overpayments.
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The Court of Appeal ruled in favour of Conde Nast, and this decision was upheld by the law lords today.
The VAT men had argued that although VAT had been overpaid by the publisher, it was not legally entitled to go back and claim the whole of the overpayments. They claimed that under European law to go back so far would be unreasonable.
Lord Hope said that if the law in respect of the time limits for reclaiming overpaid VAT were to be changed, it was for Parliament to do it.
“Until this is done the three year time limit must be disapplied,” he said.
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