Billionaire Barclay brothers lose £1.25bn VAT case

The billionaire Barclay twin brothers, owners of The Daily Telegraph, London’s Ritz Hotel and Liverpool-based retailer Littlewoods, have lost a legal battle after the Supreme Court ruled that 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.

It is believed that if the brothers, who began legal proceedings against HMRC more than a decade ago, had won the battle, HMRC could have faced more than 5,000 similar cases.

On dismissing the claim, the Supreme Court said: “The payment of interest in this case cannot realistically be regarded as having deprived Littlewoods of an adequate indemnity.”

The brothers 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.”