9
Feb
Marks & Spencer VAT win
Marks and Spencer (M&S) won a landmark victory last year in
the European Court of Justice (ECJ). The case concerned whether or
not HMRC were correct to limit the amount of VAT they repaid to the
company after their chocolate teacakes were reclassified as a cake
rather than a chocolate biscuit. The issue of cakes and chocolate
biscuits is an important one as cakes are zero rated rather than
standard rated. The case dates back many years.
HMRC only repaid M&S 10% of the output tax it had overpaid
on sales of chocolate teacakes on the grounds that the other 90%
had been suffered by the customer and so M&S would be
‘unduly enriched’ if it was all repaid. The ECJ ruled
in favour of M&S and the case was referred back to the House of
Lords.
The House of Lords has now confirmed that HMRC will not contest
this issue further and that M&S are due their refund. This
opens the way for other claims of this nature. If you think that
this case may have implications for your business, please do get in
touch with us.
Internet links:
Parliamentary judgment
Times online article
back to top