Fleming-claims and restitution

SPEED READ Where tax has been levied tax in breach of Community law, the Member State is bound to pay restitution. Restitutionary rights exist alongside the statutory repayment provisions. The UK Courts have concluded that restitution can include compound interest, but subject to national limitation periods. The courts have also held that time begins to run for such claims from the date of payment of tax, no extension of the limitation period being possible. This would render the right to compound interest largely theoretical, being time-barred in practice. A separate issue is whether Fleming-payments are taxable as trade receipts. On this point HMRC’s arguments are far from convincing.