Responding to today's Supreme Court judgment in the Prudential Assurance Company Ltd (Respondent) v Commissioners for Her Majesty’s Revenue and Customs (Appellant) case, Dan Robertson, corporate tax partner at RSM said:
'The Supreme Court has today ruled that HMRC should only be liable to repay simple rather than compound interest on tax that was incorrectly levied on Prudential. The decision reverses the rulings of the lower courts in the case and departs from the reasoning of the same court in the earlier case of Sempra Metals.
'In Prudential it seems that the difference between simple and compound interest was only modest but, more importantly, the judgment is likely to put a stop to many other claims that had been lodged following the earlier court decisions.
'HMRC have estimated that the total amount of interest that had been at stake was in the region of £4bn to £5bn. This would have represented a substantial cost to the UK exchequer, so the decision should come as a great relief to the Treasury.
'This latest case is also of considerable importance from a legal perspective and provides some much-needed clarity on some of the fundamental issues in the law of unjust enrichment.'