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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 |
