The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the situations when HMRC will seek to charge default interest on outstanding VAT due by a business. Full details of the default interest can be found in the VDIM1000..
Default interest was introduced in Finance Act 1985 (subscription sensitive) and was applied to VAT return periods starting on or after 1 April 1990. Default interest was introduced as a way of providing commercial restitution to the Treasury if the taxpayer has over claimed or underpaid VAT and as a result there has been a loss of revenue. Please see VDIM3000 for more information on commercial restitution.
Default interest should not be charged by HMRC in situations where the business has under-declared output tax, but the customer would have been able to recover that input VAT amount in full, had the supplier correctly charged VAT.
A business may be charged default interest where:
If a business has made an error and it considers that default interest should not be charged by HMRC on the amount, it
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