CASES

John Wilkins & Others v HMRC [2011] EWCA Civ 429

15 April 2011

The case concerns claims for compound interest by motor traders who made overpayments of VAT. They seek to recover compound interest under VATA 94 and through the tax tribunal. This is the latest decision in the VAT compound interest litigation, given by the Court of appeal on appeal from the first instance decision of the Upper Tribunal.

HMRC applied for a stay of the appeals until after the Court of Justice of the European Union ("CJEU") had delivered its judgment in Case C-591/10 referred by Vos J on 4 November 2010 in Littlewoods Retail Ltd v HMRC [2010] EWHC 2771 (Ch) and [2011] STC 171 following his substantive judgment on 19 May 2010 reported at [2010] EWHC 1071 (Ch), [2010] STC 2027. The Wilkins appellants opposed the application, and countered with their own applications for an immediate reference to the CJEU for a preliminary on several questions including similar questions to those referred by Vos J on whether there is an EU law right to compound interest and further questions relating to compound interest under VATA 94 on Marleasing interpretation and the application of the EU principles of effectiveness and equivalence ruling pursuant to Article 267 of the EU Treaty.

Wilkins and Lookers said that the questions referred to the CJEU by Vos J were inadequate to enable their appeals to be properly determined, and that, in any event, they were entitled to have their own reference because they had their own claims to compound interest.

The Court of Appeal did not consider the appellant's application to be appropriate merely because Wilkins and Lookers had their own claims which they wished to advance. This could be said of any of the large number of taxpayers who have, or claim to have, overpaid VAT contrary to their directly effective rights under EU law. The Court also held that it was not appropriate to refer any question on Marleasing interpretation and the EU law principles of effectiveness and equivalence as they were well-established and well defined in case law. Their application to the facts of any particular case may be difficult, but that difficulty cannot, in the absence of some special feature, warrant a reference to the CJEU for a preliminary ruling. The interpretation of national legislation is a matter for the national court to decide. Moreover, it is obvious that the national court will usually be better placed than the CJEU to decide whether, and the extent to which, the Marleasing principle and the principles of effectiveness and equivalence require national legislation to be interpreted or, in any event, applied in a particular way, bearing in mind the language of the legislation and the policy and principles underlying it.

HMRC's application for a stay was therefore granted whilst the appellant's application for a reference to the CJEU was dismissed. Peter Mantle and Philip Woolfe represented HMRC.

To read the judgment, please click here.

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Peter Mantle
Philip Woolfe