HMRC to abolish repayment supplement for 0.5% interest payment

Source – Accounting Web

HMRC will pay 0.5% annual interest on delayed VAT claims from April 2022.

Most advisers are aware that if HMRC delays repaying a VAT return claim by more than 30 days (plus additional days to give it a reasonable length of time to make enquiries) it will pay a repayment supplement equal to 5% of the repayment amount or £50, whichever is greater.

There is no supplement paid, however, if the claim is significantly adjusted because of errors made on the return. The government’s intention is that the repayment supplement scheme will be scrapped for VAT periods beginning on or after 1 April 2022. But that is not the end of the story.

Interest concession

recent amendment to Finance Bill 2021 (Amendment 19) means that HMRC will pay interest if it delays a repayment VAT return to check the figures – effective for periods beginning on or after 1 April 2022.

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