EC backs M&S in #12m VAT battle.

An M&S spokesman told Accountancy Age the commission would submit a ‘written objection’ against the UK government over its refusal to repay the VAT.

M&S is claiming backdated VAT going back to April 1973 – the date VAT was introduced in the UK – on bottled water, biscuits, teacakes and gift vouchers.

The matter has been referred to Europe after M&S appealed against a High Court ruling which found in favour of Customs.

Customs’ defence is based on the ‘three-year cap’ rule introduced in 1996. The rule allows Customs to withhold backdated VAT repayments on claims going back more than three years.

The government office says the rule puts it on an ‘equal footing with businesses’, but M&S argues the rule was introduced only a year after its original claim was submitted and is therefore invalid as a defence against repayment.

A Customs spokesman told Accountancy Age: ‘We believe we have acted quite properly and have a strong case.’

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