Commentary

V5.191 VAT repayment supplement—payments to traders

Part V5 Compliance, enforcement and appeals

V5.191 VAT repayment supplement—payments to traders

Interest and repayment supplement

V5.191 VAT repayment supplement—payments to traders

A person is entitled to credit for so much of his input tax as is allowable. The amount of the credit is deducted from any output tax due from him. If the amount of the credit exceeds the amount of the output tax, the amount of the excess is paid to him by HMRC. Alternatively, if no output tax is due, the amount of the credit is paid to him by HMRC1. For the payments made by HMRC, see V5.111.

Entitlement to VAT repayment supplement

The payment to which a person is entitled under the foregoing provisions is increased by the addition of a supplement if the following conditions are met2:

  1.  

    •     the requisite return or claim3 is received by HMRC no later than the last day on which it is required to be furnished or made4

  2.  

    •     a written instruction directing the making of the payment is not issued by HMRC within the period of 305 days beginning with the later of:

  3.  
    1.  

      –     the day after the last day of the prescribed accounting period6, and

    2.  

      –     the date on which HMRC receive the return

  4.  

    and

  5.  

    •     the amount shown on the return as due by way of payment does not exceed the payment which was in fact due by more than the greater of 5% of the payment or £250

A return is 'received' for the purposes of condition 1 on the day when HMRC actually receive it7. Thus,

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