OVER £12million of taxpayers' cash tied up in the Icelandic bank collapse looks likely to be recovered following a court ruling.

Thames Valley Police, which is set to recoup about £5m, has hailed the decision by the Icelandic Supreme Court as “a huge victory”.

Wycombe District Council and Buckinghamshire County Council also had cash tied up in two different Icelandic banks – which collapsed in 2008.

BCC invested £5m in Landsbanki and WDC £2.5m with Glitnir.

A court judgement reached this week means UK local authorities will get paid first when the money is given back.

The claims have been recognised as deposits with priority status over other creditors’ claims.

The value of the Thames Valley Police Authority claim is for £5.287m - the original £5m deposit plus lost interest.

TVP anticipates recovering 98 per cent – about £5.1m.

A statement from TVP read: “This decision, which comes more than three years after the banks failed, is a huge victory.

“We are delighted the Icelandic Supreme Court has found in favour of UK local authorities and other UK wholesale depositors in the recent test case trials.

“We await confirmation from the winding up boards of both banks that they will apply the Supreme Court decision to the non-test cases, such as Thames Valley Police Authority, and/or their intended next steps.”

BCC said it is also awaiting this confirmation from the banks.

WDC spokesman Sue Robinson said: “This judgement in the test case means that UK local authorities’ claims have been recognised as deposits with priority status over other creditors’ claims.

“Wycombe District Council is therefore optimistic that it will recover almost all of the money it had deposited with Glitnir (£2.5m).”

The legal action has been coordinated via the Local Government Association, keeping costs to less than one per cent of the expected amount to be recovered.