European Court's teacake ruling is sweet victory
Marks & Spencer tasted victory yesterday in a long-running legal battle with HM Revenue & Customs over £3.5m of overpaid value-added tax on chocolate teacakes. The European Court of Justice ruled in favour of M&S in the dispute, which spanned 12 years and took two trips to the European Court.
The legal action arose because chocolate teacakes were wrongly classed as biscuits from 1973, when VAT was introduced, until 1994 when HMRC admitted they were cakes after all.
In the UK, baked products such as bread, cakes and flapjacks are free of VAT but the tax is charged on cereal bars and partly or wholly coated biscuits.
HMRC argued that repaying the full amount would "unjustly enrich" M&S because about 90 per cent of the tax had been passed on to customers. M&S argued that the same defence was not applied to claims made by its competitors, who were refunded without question. HMRC distinguished between "payment traders" who owed VAT to the Treasury and "repayment traders" who were owed VAT. M&S was classed as a payment trader and had its claim refused.
The European Court ruled that the defence of unjust enrichment cannot be invoked against a taxpayer if it goes against the principle of equal treatment. The Government had already amended the law in 2005 to make the application of unjust enrichment consistent.
M&S said it hoped the House of Lords would follow the European Court and find in its favour.
- 1 Home Office says Nigerian asylum-seeker can’t be a lesbian as she’s got children
- 2 What happens to your body when you give up sugar?
- 3 Japanese island overrun with cats after population explodes
- 4 Apple and Google users being spied on for a decade because of 'Freak' security flaw
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
The City of the Monkey God: Archaeologists claim to have found city lost for 1,000 years in remote Honduran jungle
Japanese island overrun with cats after population explodes
Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
Bubonic plague-carrying fleas found on New York City rats
London property boom built on dirty money
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Ukip would cut billions from Scottish budget to fund English tax cuts
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...
£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...