Businesses finally received a ruling in their favour in their fight to receive compound interest on overpaid VAT. The Court of Appeal found that the motor dealer claimants in the group litigation known as the Compound Interest Project group (CIP group) were in time to lodge their appeals to the Tribunal.

This follows the bad news delivered by the Court of Appeal in March in respect of another compound interest group action (known as the VIC GLO) which cast doubt on the right to receive compound interest at all under EU law. The Judge believed a reference to the European Court of Justice would be necessary in future to finally determine this issue. This will certainly happen as the High Court judge who heard the recent Littlewoods Retail case, where there is more than £1 billion of compound interest at stake, has now recommended some questions for referral to Europe.

This judgement, released on 30 July, does not confirm that the claimants have a right to compound interest, either via the Tribunal route or via a High Court claim for restitution. What it does mean is that the motor dealer claimants submitted their appeals in time. Should the eventual finding of the ECJ be that the Tribunal has jurisdiction to award compound interest, then they should receive interest.

However, struggling motor dealers who are pinning their hopes on receiving this money will still have several more years to wait as any ECJ judgement is unlikely to be released before the end of 2012.