Tax - High Court rules on Courts

Furniture retail chain Courts has been ordered by three appeal court judges to pay more than £1m in extra VAT payments. The store had been ordered to pay £5,426,369 by the High Court in November 2003.

When the case appeared before the Court of Appeal last month, Lord Justice Jonathan Parker criticised the company for seeking to challenge a ruling that it must pay the £1m-plus balance for VAT due. The store could have been 'in no doubt', he said, that the Customs commissioners were 'doing their best to deal fairly and straightforwardly with Courts'.

Courts had challenged the decision of the VAT tribunal, backed by the High Court last November, that it must pay the further £1,079,062 on top of the £4,268,213 it had already paid for the eight periods from December 1997 to September 1999.

The commissioners had originally, in December 1999, assessed the VAT for Courts to pay at £5,426,369. However, in June 2002, they sent a further letter claiming that assessment had been 'sent in error'.

Courts claimed that this constituted withdrawal of an assessment which removed its liability to pay the £4,268,213 it argued was due for the periods in question.

However, the VAT tribunal ruled that what happened did not constitute withdrawal of an assessment and only modified it to take into account the payments that Courts had made.

Last November, Mr Justice Blackburne at the High Court backed that view, dismissing Courts' appeal, leaving it liable to pay the balance. He said it was 'certainly open to the tribunal on the facts to conclude as it had done'.

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