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HMRC v Colaingrove Ltd [2025] UKUT 00360 (TCC)
The Upper Tribunal (Tax and Chancery Chamber) has allowed HMRC’s appeal and dismissed Colaingrove Limited’s cross‑appeal concerning entitlement to additional discretionary interest under section 84(8) of the Value Added Tax Act 1994 (now repealed). The Tribunal set aside the First‑tier Tribunal’s earlier decision insofar as it had awarded additional interest, and dismissed all applications for further interest by Colaingrove.
The case concerned whether Colaingrove was entitled to discretionary interest under s.84(8) of the Value Added Tax Act 1994 (VATA) in addition to statutory interest already paid by HMRC under s.78 VATA on VAT repaid by HMRC following the resolution of various appeals started between 2000 and 2013, in respect of accounting periods between 1989 and 2011. The appeals were against s.73 VATA assessments and s.80 VATA claims. Section 84(8) was repealed with effect from 1 April 2009, but continued to apply to certain appeals and decisions pursuant to the transitional and saving provisions of the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009. The company sought over £8.2 million in additional interest, arguing that the statutory interest paid by HMRC did not reflect the true cost of borrowing incurred due to the overpayments.
The Tribunal allowed HMRC’s appeal on the core issue, ruling that s.84(8) VATA does not apply to repayments made following litigation of s.80 VATA claims. Sections 80 and 83(t) (now 83(1)(t), concerning appeals from refusals of s.80 claims) provide the exclusive statutory remedy and jurisdictional route for reclaiming overpaid VAT; and discretionary interest under section 84(8) is not available in such cases.
The Tribunal, upholding the First-tier Tribunal (FTT), also rejected Colaingrove’s submission on its cross-appeal to the effect that discretionary interest should be awarded in relation to appealable decisions made after the repeal of s.84(8) where those appealable decisions were based on in-principle liability decisions made before 1 April 2009. For the purposes of the TTF Order, a “decision” referred to an appealable decision concerning matters within s. 83 VATA which are adverse to an appellant.
The Tribunal rejected Colaingrove’s EU law-based arguments, concluding by reference to Littlewoods Limited v HMRC [2017] UKSC 70 that the statutory interest regime under UK law provides an “adequate indemnity” and complies with the principles of effectiveness and equivalence.
The Tribunal rejected Colaingrove’s appeal against the rate of the additional interest awarded by the FTT in respect of its appeals against assessments, holding that the rate was a matter of discretion for the FTT and that there was no error of law in its exercise of that discretion.
Philip Moser KC and Andrew Macnab appeared on behalf of HMRC.