Use Value and Time Value Through the Lens of Money Functions

The decision of the House of Lords in Sempra Metals v IRC 2007 adopted compound interest as the measure of damages for the time period that claimant was deprived of the opportunity to use money. A decade later, the Supreme Court in the Littlewoods v HMRC 2017 deferred to statutory simple interest. The majority in Prudential Assurance Company Ltd. v HMRC (PAC) 2018 said that the use value in Sempra is a free-standing cause of action but did not rule on the matter. PAC asserted that the claim to interest is one that is based on the failure to pay a debt by its due date. A close examination of these cases reveals that the theory underpinning the debt analysis is to treat money being held for its use value relative to its function as unit of account, which employs the nominalist view that money has a constant store value, whereas the use value in Sempra treats money being held for its use value relative to its function as a medium of exchange.