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Default interest – HMRC delays

13th Nov 2021
VAT Consultant vatadvice.org
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HMRC are currently taking several months to process Voluntary Disclosures. This has some interesting consequences for businesses and other organisations.

VAT Act 1994, s74(1) provides that interest is calculated up to the date of payment. Thus, where HMRC delay in processing an assessment to tax, it will have the effect of increasing the interest assessment.

The taxpayer could make a payment to HMRC ‘on account,’ to prevent interest increasing. If you do send such a payment, make sure you drop them a note, so they don’t return it!

I did wonder whether the HMRC delay could provide a reason for them to calculate interest up to the date of notification only, for example. HMRC guidance seems to answer this in the negative: “Interest should not be inhibited … because of any delay by HMRC.” (see link below)

But I do intend to ask.

This is the link to the HMRC Default Interest manual: www.gov.uk/hmrc-internal-manuals/vat-default-interest/vdim8030

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By Paul Crowley
14th Nov 2021 18:01

If only there was consistency
HMRC delay on refund means repayment supplement put into hiatus.

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By Paul Crowley
16th Nov 2021 17:27

Much appreciated
Always read the articles, always get a benefit

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