Manchester United’s decision to take HMRC to the High Court in an argument about repayments of VAT could open the floodgates for thousands of businesses across the UK.
The former champions of the Premier League have started legal action against the taxman in a bid to reclaim more than £300,000 they say they are owed in backdated payments.
The club have already been paid £61,000 in “simple interest” but they argue they are entitled to be paid “compound interest”.
If they win the case and it is proven that VAT repayments should be paid with compound interest, it is estimated that UK taxpayers will be owed more than £2bn.
“If Manchester United win this case then we will see a rush of other businesses scrambling to reclaim compound interest themselves.
However, any business wanting to do this needs to make sure they have a specialised tax adviser to check their accounts thoroughly to ensure they are only claiming what they are rightfully owed.
No-one wants to run up unnecessary legal fees.”
However, KinsellaTax also thinks that the claim for compound interest will fail as there are recent cases that appear to have sided with HMRC on whether compound or simple interest is payable.