In the Upper Tribunal, HBOS and Lloyds Banking Group appealed against a First Tier Tribunal (FTT) decision relating to bad debt relief for periods between 1989 and 1997.

The Upper Tribunal ruled that the banking group was entitled to be paid interest from HMRC relating to the time they made repayment claims, when UK legislation was not compliant with EU law.

The key issues raised in the appeal related to the bad debt relief legislation that had previously been held to be incompatible with EU law and the period over which interest arose.

The interest at issue in the appeal relates to claims that the appellants, HBOS and Lloyds, made for VAT bad debt relief.