CUSTOMS and Excise has lost its appeal against a Divisional Court decision last March which ruled in favour of Lunn Poly over Insurance Premium Tax.
After a two-day hearing, the Court of Appeal ruled unanimously in Lunn Poly’s favour that the differential levels of IPT which existed between April 1997 and August 1998 were unlawful.
It agreed with the Divisional Court’s original decision that having a rate of 17.5% for insurance sold through travel agents and only 4% for direct insurers constituted illegal state aid which distorted or threatened to distort competition.
The Government has been ordered to pay costs to Lunn Poly. The retailer’s buying director David Bryson refused to disclose the exact amount but said: “It is well into six figures.”
As part of the Court of Appeal’s decision, Customs and Excise has been refused leave to appeal to the House of Lords.
However, it has got the right – within one month of the original decision – to ask the House of Lords itself for permission to appeal.
A spokesman for Customs and Excise said it had not made a decision whether to continue the case in the higher court.
Bryson said the legal battle had taken up a great deal of time and effort for Lunn Poly over the last 18 months. “I do hope this now brings the matter to a conclusion,” he said.
When the original decision was made by the Divisional Court, ABTA said it was considering how agents could seek compensation from the Government.
ABTAchief executive Ian Reynolds said its VATWorking Party was evaluating two options. “One is to reclaim the difference between the 4% and 17.5% and the other is to sue the Government for damages, because the industry has suffered long-term injury.”
He said nothing could be done until it was known whether Customs and Excise would appeal again.