The Barclays lose £1.25bn VAT dispute

THE billionaire Barclay brothers have lost a long battle with HMRC after the Supreme Court ruled the taxman does not owe them £1.25bn.

David and Frederick Barclay had been pursuing the claim after Littlewoods, the retailer they own through Shop Direct, overpaid VAT to HMRC between 1973 and 2004.

The company had received a £205m refund from HMRC and ‘simple interest’ of £268m, according to court filings. But Littlewoods sought ‘additional interest’, calculated on a compound basis, of £1.25bn.

However, the Supreme Court unanimously dismissed the claim.

The case is significant for HMRC as, had it lost, it would have faced the prospect of hefty bills for other companies with similar grievances.

The Barclay brothers, who also own the Telegraph newspaper, said: ‘This is a disappointing outcome. Having succeeded in the High Court, the European Court of Justice and the Court of Appeal in a long process lasting over a decade, we are surprised by the Supreme Court’s decision.

‘Given the importance of the legal issues and the sums at stake, we felt a duty to pursue this to its ultimate conclusion. The decision has provided legal certainty and we can now finally draw a line under this case.’