Stores in row over tax 'scam'

Leading high street names are today heading for a legal battle with Customs and Excise over a tax avoidance scheme involving "hundreds of millions of pounds".

Tesco, Dixons, Currys and PC World are among companies that Customs officials believe have deprived the Treasury through credit and debit card handling fees which the companies insist are exempt from VAT.

"It's a scam that's spread rapidly and we're heading for a big punch-up with the major stores. It is being operated by virtually every large retailer," a Customs spokesman said today.

"It's not even as if the money that is being saved on VAT goes to the consumer."