CH143080 - Interest: Late payment interest: Special provisions: Special provisions for start dates: Recovery of VAT - example

You must check whether, and from which date, the FA 2009 interest rules apply to the tax or duty you are dealing with. See CH140160 for full details.

Mhairi submitted her VAT return for the accounting period 1 October 2023 to 31 December 2023 by the due date of 7 February 2024. This showed that Mhairi was due a VAT Credit of £24,000 and HMRC paid this to Mhairi on 13 February 2024 with repayment interest.

However, an officer later identified that Mhairi had made an error on the return. On 5 December 2024 they made an assessment for £6,000 under section 73(2) VATA94. The notice of assessment states that Mhairi has 30 days to pay and she pays this to HMRC on 4 January 2025.

The late payment interest start date for £6,000 assessed is 13 February 2024 until the late payment interest end date of 4 January 2025. Mhairi will be charged late payment interest on £6,000 for 326 days (14 February 2024 to 4 January 2025 inclusive).

See CH140220 for how to calculate the number of days.

In addition to the late payment interest, HMRC will also recover the relevant repayment interest that ought not to have been paid see CH146490.