VDIM5080 - Calculation of interest: Further interest

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.

If the tax due is not paid within 30 days of the issue date, further interest will be calculated from the last notification of interest i.e. the calculation date of the assessment or last further interest notification(section 76(7) VATA allows for such assessments to be made).

It will be calculated on any outstanding interest bearing tax at monthly intervals until all the interest bearing tax is paid, subject to the time limits, see VDIM2070 or until the taxpayer deregisters or becomes insolvent.

However if an assessment is later amended, interest will be re-calculated up to the date of amendment rather than the OA calculation date and a new 30 day allowance will be set by reference to the date of amendment.

The OA amendment date will become the new end date for interest, provided the taxpayer pays the amended tax amount liable to interest within this revised 30 day period. But if the amendment occurs within 30 days, the tax must still be paid within the 30 days of the issue of the original tax assessment, if not further interest will be calculated from the issue date of the original assessment.