Littlewoods Ltd and others v HMRC [2017] UKSC 70

The Supreme Court has handed down judgment in Littlewoods Ltd v HMRC [2017] UKSC 70. The Court has ruled that those claiming refunds of overpaid VAT from HMRC do not have a right to compound interest either under EU law or under the common law; and that interest on such refunds is limited to statutory, simple interest under section 78 of the Value Added Tax Act 1994. The Court held (upholding Vos J and the Court of Appeal, and dismissing Littlewoods’ appeal) that sections 80 and 78 of the 1994 Act exclude any common law cause of action in respect of the time or use value of overpaid VAT (whether compound interest or otherwise). The Supreme Court further held (reversing Henderson J and the Court of Appeal, and allowing HMRC’s appeal) that EU law–in particular, the principle of effectivenessdid not give Littlewoods any EU law right to compound interest; and that the UK’s regime, providing for simple interest did not deprive Littlewoods of “an adequate indemnity for the loss occasioned by undue payment” of the tax. Consequently, the High Court’s 2014 judgments in favour of Littlewoods, totalling approximately £1.25 billion, will be set aside. The Court’s judgment also puts paid to approximately 5,000 other claims, estimated at £17 billion, for compound interest on overpaid VAT. This is an important judgment, not just because of the very large sums involved and number of taxpayers affected, but also for the Supreme Court’s reasoning on the relationship between EU law rights and national law remedies and its conclusion that EU law had not harmonised and did not dictate the content of national law interest remedies.

Andrew Macnab and Peter Mantle of Monckton Chambers (led by Jonathan Swift QC of 11 King’s Bench Walk) represented HMRC.

The CMA announced yesterday that it has accepted commitments by the Showmen’s Guild of Great Britain, the main association for travelling showmen who earn their living at funfairs. The announcement closes, without the imposition of any penalty, an investigation by the CMA into the Guild’s rules that led to the issue of a Statement of Objections in December 2016 (which indicated that the CMA was at that stage minded to impose penalties).  The commitments offered, and the reasons why the CMA accepted them, are set out here: in essence, the CMA agreed that its concerns were sufficiently addressed by amendments to the Guild’s rules that: (a) made it easier for new members to join the Guild; (b) removed a number of restrictions on the participation of non-members at fairs; and (c) changed the Guild’s system of “established rights” held by its members to grounds at fairs so as to make transfer of such rights easier, and for landowners to make improvements to fairs on their land.  The rule changes now have to be approved by the Guild’s members.

The Guild was represented during the CMA inquiry by George Peretz QC, Michael Armitage and Imogen Proud.

The European Court of Justice has decided this morning that contract bridge is not a sport. Therefore, entry fees to bridge tournaments are not exempt from VAT. Although bridge involves intellectual effort and skill, the Court held that the term “sport” referred to an activity characterised by a “not negligible” physical element. The Court recognised that bridge required logic, memory and lateral thinking and benefitted the mental and physical health of players. But the Court disagreed with Advocate General Szpunar that the health benefits of playing bridge indicated that bridge should fall within the VAT exemption for sports.

Raymond Hill represented the United Kingdom before the European Court in successfully arguing that bridge was not a sport.

Brendan McGurk has successfully defended Italy and Benetton Lock, Marco Fuser, following his citing for an alleged bite on Francois Louw during the European Champions Cup clash between Bath and Benetton on 14 October 2017. Louw was also cited in the same incident for making contact with Fuser’s eye. Following a hearing before the EPCR Disciplinary Panel, the case brought against Fuser was dismissed.

The Competition Appeal Tribunal has dismissed an appeal by Balmoral Tanks against the CMA’s decision finding that Balmoral and its competitors infringed competition law by exchanging commercially sensitive information with respect to galvanised steel tanks.  The CMA found that an information exchange at a single meeting in July 2012 sufficed to establish the infringement.

The CMA had covertly video recorded the meeting as part of its criminal investigation into a seven year cartel between four suppliers of galvanised steel tanks. The CMA accepted that Balmoral was not part of that cartel but found that it had been guilty of a separate object infringement.

In its appeal, Balmoral argued that it attended the July 2012 meeting with the legitimate purpose of informing its competitors that it did not want to be involved in the cartel. It argued that it could not be criticised merely for having received inducements to join the cartel.  It also argued that a single meeting did not suffice to establish the infringement, that no sensitive information was exchanged at that meeting and that no fine should have been imposed given Balmoral’s positive impact on the market.

The Tribunal has fully upheld the CMA’s decision. In particular, it accepts the CMA’s findings that Balmoral was actively involved in an unlawful information exchange of sensitive information which reduced uncertainty on the market. The Tribunal confirms that, in the context of this market, the exchange of pricing information at a single meeting was unlawful.  The judgment carries out a detailed review of the CMA’s findings regarding the nature of the information exchanged between the parties and why that exchange constituted a “by object” restriction of competition.

The Tribunal stated that “It is because executives meeting together for a legitimate industry purpose must be firmly discouraged from giving into any temptation they may face to slip into illegitimate discussion of prices that the case law defines the concept of concerted practice in price exchanges so broadly.”

The Tribunal fully upheld the fine of £130,000 imposed on Balmoral, dismissing arguments that Balmoral should not have been fined having regard to the CMA’s approach to the cartelists, and that any fine imposed should have been lower.

The judgment can be found here.

Rob Williams and James Bourke acted for the CMA.