Debenhams victory over Vatman

DEPARTMENT stores group Debenhams has won what may turn out to be a landmark victory for retailers. It won a High Court appeal against a tax tribunal judgment that it was avoiding VAT.

Under a scheme adopted by about 75 groups including Marks & Spencer, Boots and Tesco, retailers said that 2.5% of the value of everything they sell by credit or debit cards should be treated as a 'card handling fee' and escape VAT.

But Customs & Excise argued the scheme amounted to tax avoidance.

The ramifications of the ruling are considerable - there is £300m at stake from existing cases.

Debenhams is 'pleased with the findings'. But the Treasury is to appeal.