VSIM6400 - For what period is statutory interest due: failure to provide information
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.
Section 78(8) VATA provides for any delay in the authorisation of the payment of statutory interest (SI) caused by the conduct of the taxpayer to be taken into account when determining the applicable period, see VSIM6200.
Section 78(8A) identifies the particular conduct of the taxpayer that should be considered, see VSIM6300.
Section 78(8A)(b) VATA covers any period relating to the failure to provide information required by HMRC to validate entitlement to both the repayment and SI. This applies before or at the time the claim was made and also subsequently in response to a request by HMRC.
It requires the taxpayer, anyone acting on his behalf:
- Book keeper
- Accountant
- Spouse
or anyone under their influence or control:
- Customer, or
- Supplier
to provide all the information required to enable HMRC to establish the right of the taxpayer to a payment and the amount of that payment and the right to SI.
‘At the time’ the claim is made can cover information accompanying the claim and/or readily available at the taxpayers premises.
‘Before’ may be discussions leading up to the making of a claim, whereby information is requested by HMRC to establish that a claim can be made, that is, whether a taxpayers claim meets the appropriate criteria, see VR1100. This can cover the refund itself, that is, whether there has actually been an over-declaration or credit under-claim, and whether HMRC did make an error.
This is more likely to happen with one off claims and not as a result of an adverse Tribunal decision or court judgement, where generally speaking it is easier to establish whether or not there has been an error by HMRC. (In these cases HMRC publishes the right to make a claim in a Revenue and Customs Brief).
This provision also covers for instance large businesses where information is kept on the premises. If, for example, a visit to check the claim keeps getting postponed by a taxpayer, then we could deduct the time taken to conduct a visit to see the information available.
Section 78 (9) VATA supports Section 78 (8A) in that it sets out the period ‘start and stop’ dates in relation to requests for further information. In simple terms it begins from the date on which the taxpayer was requested to provide the relevant information and ends with the earliest time it is considered that the taxpayer has supplied a complete answer to the request for information, or it is considered unnecessary to be provided with any information in answer to the request.
On occasions there may be disagreements with taxpayers as to whether or not we have all the information necessary to determine the claim. There can be negotiations over partial exemption special methods and what is included and excluded from the common pot.
When issuing a request for further information you may set a reasonable time limit for a response depending on what information you require. You should also warn the taxpayer that the applicable period may be reduced for statutory interest if he delays his response for a significant period of time (this is judged on the circumstances of the case).
You will need to judge at what point you considered you had all the relevant information to make a decision on both the repayment claim and the statutory interest claim. You will also need to decide whether any period of delay in supplying information should be deducted. Note: You must be sure that any evidence of a delay must be strong enough to defend in the event of a Tribunal appeal.
VATA s 78 (8) (8A) (9)