VDIM12020 - Review and appeals procedures

This guidance deals with interest matters in respect of prescribed accounting periods starting on or before 31 December 2022. Interest matters with effect from 01 January 2023 are dealt with under Finance Act 2009.

Please see Compliance Handbook page CH140000 onwards to find the new interest rules guidance.

HMRC must offer a statutory review of all appealable decisions: the taxpayer has 30 days within which to take up that offer. The Appeals, Reviews and Tribunals Guidance (ARTG) sets out in detail the procedures you should follow if a taxpayer or his representative requests a review of or appeals against any appealable decision.

The liability to an interest charge is not an appealable decision but the amount of the interest charge is, see VDIM12010.

Public Notice 700/43 explains to taxpayers what they should do if they disagree with the amount of interest charged.

The VAT 34 Assessment notes issued with the Notice of assessed tax and interest also explains what taxpayers should do if they disagree with any of the amounts on the Notice.

If the taxpayer has requested a statutory review of or has appealed against the amount of interest charged, the reviewing officer will need to consider the following points:

  • Setting the LOCAL OFFICE review code
  • Confirm the tax assessment has been correctly calculated (although the taxpayer may only have requested a review of the amount of interest , the first action should always be to confirm that the tax assessment is correct)
  • Many taxpayers appeal against the amount of further interest charged because money they have paid has not been appropriated to the correct debt on their account. Therefore you should make sure that all money or remittances paid to HMRC have been correctly appropriated to outstanding debts.
  • Consider if any of the other circumstances shown in VDIM7000 exist for inhibiting or reducing the interest amount
  • Using your discretion consider whether, in all the circumstances of the case, it is reasonable to uphold the amount of interest charged.
  • Let the taxpayer know the outcome of the review.

As there is no right of appeal to a Tribunal against HMRC’s decision to assess for default interest (i.e. liability to) we are not obliged to offer a statutory review.

It is good practice therefore to encourage the taxpayer (at the time of discovery of the under declaration or over claim of VAT) to provide as much detail as possible about the error to help you decide if it is appropriate to charge interest.

If following the issue of an interest assessment the taxpayer requests a reconsideration and/or submits further information which may impact on the decision to charge interest, you should give it due and fair consideration.