Companies could be able to claim back overpaid VAT going back decades after a landmark ruling by the Court of Appeal.

The Law Lords rejected an appeal by HMRC against a decision to overturn a three-year limitation period on companies making back claims. The move could cost HMRC £100m.

The case was initially brought by magazine publisher Conde Nast which was attempting to reclaim VAT input on staff expenses going back to 1973.

But the Court of Appeal ruled that the government's introduction of the time limit when the tax law changed in 1997 was unfair as it failed to allow a transitional period between the new and the old regimes.

According to accountancy firm Deloitte, which advised Conde Nast, the case could affect all businesses which might have valid claims for under-recovered VAT under the old law but were blocked by the three-year cap.