VAT ruling could hit others
Debenhams has lost a landmark case that could mean retailers across the country will have to pay more VAT.

Yesterday, the court of appeal ruled in favour of the Government, closing a loophole that allowed big retailers to claim 2.5 per cent of each purchase as a card-handling fee that was not subject to VAT.

The practice was ruled illegal in 2003 by a VAT tribunal but Debenhams contested the ruling in court last year and won a reprieve.

More than 75 retailers are understood to use this loophole, which is estimated to be worth more than£6 million a year to a retailer the size of Debenhams.

Debenhams said it was considering its position in light of the ruling.