Littlewoods Retail Ltd and Others v HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | SIR CHARLES GRAY,Sir Charles Gray |
| Judgment Date | 31 October 2008 |
| Neutral Citation | [2008] EWHC 2622 (QB) |
| Docket Number | Case No: HQ07X00829 |
| Court | Queen's Bench Division |
| Date | 31 October 2008 |
[2008] EWHC 2622 (QB).
Queen's Bench Division.
Sir Charles Gray.
Steven Elliott (instructed by PriceWaterhouseCoopers Legal LLP) for the claimants.
Andrew Macnab (instructed by the Solicitor for HM Revenue & Customs) for the defendants.
The following cases were referred to in the judgment:
Autologic Holdings plc v IR CommrsTAXELR [2005] BTC 402; [2006] 1 AC 118
Corbett v South Yorkshire Strategic Health AuthorityUNK [2006] EWCA Civ 1797
Francovitch v ItalyECAS (Case C-479/93) [1995] ECR I-3843
Kingcastle Ltd v Owen-OwenUNK (unreported, 19 February 1999, CA)
Sempra Metals Ltd v IR CommrsTAXELR [2007] BTC 509; [2008] 1 AC 561
Yates Settlement Trust, ReUNK [1954] 1 All ER 619
Value added tax - Appeal - Practice and procedure - Stay of proceedings - Discretion of court - Overpayment - Refund - Compound interest - Taxpayer companies challenging refusal of Customs to refund overpayment of VAT - Customs applying for stay of proceedings pending outcome of separate case - Whether court should exercise discretion to stay proceedings - Customs' application dismissed.
This was an application by Customs to stay proceedings concerning the overpayment of VAT, pending the outcome of another similar case.
All but one of the taxpayer companies carried on a catalogue-based business as a home shopping retailer. Each taxpayer was registered for VAT. Between 1973 and 2004, amounts were paid by the taxpayers to Customs in respect of VAT on certain of their trading activities which Customs accepted had not been due on a correct interpretation of VATA 1994 and the sixth directive. Most of the principal sums had been repaid in accordance with VATA 1994, s. 80 together with simple interest pursuant to s. 78 at the rate specified in FA 1996, s. 197. However, not all of the principal sums claimed by the taxpayers had been paid and Customs disputed the claim of certain of the taxpayers to be entitled to payment of such principal sums. The amount of the disputed principal sums exceeded £36m. The taxpayers also claimed to be entitled, either at common law or under Community law, to repayment of interest on the principal sums overpaid at a compound rate of interest. The total amount sought to be recovered was in excess of £1 billion.
The taxpayers had agreed to stay the proceedings but then gave notice to end the stay. Customs' response was to apply for a further stay until 56 days after judgment in separate proceedings under the VAT Interest Cars Group Litigation Order (the VIC GLO) due to be heard in February 2009. The claimants in the VIC GLO were a group of motor dealers whose case was that they had overpaid VAT to HMRC and were entitled to an award of compound interest at a commercial rate on the principal sums from the date of overpayment. Customs argued that justice and convenience required that the taxpayers' claims should be stayed which would be consistent with the approach adopted hitherto on behalf of the taxpayers; such a stay would save expense and court resources. Customs further contended that there were several overlapping core issues which had very large potential financial consequences not only in this litigation but also in other similar outstanding claims. The just, efficient, expeditious and fair way of dealing with the taxpayers' claims was to stay them until after Henderson J had decided them in the motor dealers' litigation. That was the time when the future conduct of the claims could be assessed in the light of the judge's conclusion. Such a stay was unlikely significantly to delay the resolution of the taxpayers' claims and Customs should not be required now to divert their resources to another claim or to have to contest the two claims simultaneously.
The question was whether the court should exercise its jurisdiction pursuant to CPR, r. 3.1(2)(f) to impose a stay of the action pending the outcome of the motor dealers' case.
Held, dismissing the application:
1. There was clearly an overlap between the issues raised in the statements of case of the taxpayers and the motor dealers. The broad question raised in each case was whether and, if so, in what circumstances Customs was liable not only to repay overpaid tax with simple interest but also to pay compound interest. Common underlying issues included the way to measure the time value of the overpayments, the taxpayers' entitlement to rely on s. 32(1)(c) of the Limitation Act 1980, the remedies available under Community law and under domestic law, and the correct method of calculating the rate of compound interest in the circumstances of the claimants' respective cases.
2. However, the commonality of those issues was of itself insufficient for a stay to be imposed. Ultimately it might turn out to be appropriate for the motor dealers' action to be the lead case but the right time to attempt to resolve that question would come when Henderson J had delivered judgment. Although it was more than likely that there would be appeals by one party or the other in the motor dealers' action, that consideration was more appropriately factored...
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