VDIM7030 - When to inhibit, amend or withdraw interest: Appeals

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 taxpayer’s appeal against the amount of interest charged has been accepted, interest may need to be suspended using the VAT673 procedures.

Officer’s Assessments are the most common type of appeal, and when an officer’s assessment is appealed against, the liability to interest may continue if the tax remains unpaid.

You should tell the taxpayer this at the earliest possible opportunity. You can exclude the tax amount from interest pending the outcome of the appeal by completing the “Tax. Excl. From Interest” field on the VAT673. This will make sure the taxpayer is not charged any interest on the amount whilst the appeal is being considered.

The VAT 673 causes the original interest to be removed from the OA screen once the indicator has been set. (There is no way of knowing the original amount if the ledger does not go back far enough, unless a copy of the OA is on Electronic Folder (EF)).

When the appeals indicator is lifted on completion of the appeal the original interest is reinstated (or recalculated taking into account any amendments to the OA) and any further interest that has become due will also be calculated.

Once the appeal is completed a VAT 675 and a VAT 647 will need to be input, this will cause the interest to be re-calculated on the amount - see VDIM12050.

Guidance on the setting and lifting of the appeals indicator including completion of the VAT 673, VAT 674 and VAT 675 can be obtained by contacting the Indirect Tax Systems mailbox. For guidance on the completion of the VAT647 see VDIM12050.

For full guidance on appeals and reviews see VDIM12000.