Interest on HMRC late repayment of your VAT claim
Never look a gift horse in the mouth they say, but certainly many businesses, and charities, are finding it difficult to reconcile their VAT accounts following the submission of a VAT return that resulted in a repayment of VAT being requested from HMRC.
From the start of the year HMRC instigated a Repayment Interest procedure - whereby, if they were late in refunding the taxpayer, an amount of repayment interest would be added to the payment. This has caused some confusion for taxpayers and - as the audit season progresses - for their auditors.
HMRC doesn't send any notification as to the value of the Repayment Interest - it doesn't seem to appear in taxpayers Digital VAT Accounts either - so how to evidence the difference between what you requested as a refund and the value actually received, if it is larger?
We understand that HMRC is in the process of addressing this missing audit trail link and from October 2023 a letter WILL be issued to show the amount of interest and, in addition, the Repayment Interest value will appear in the Digital Tax Account, but we have no news on the date that will commence.
Hardly a "gift" we appreciate but at least some commercial recompense for the delay in processes (in general) we are experiencing from HMRC's creaking administration.
If VAT technical or accounting processes are causing a concern do get in touch directly with us. Centurion is the Indirect Tax specialist team within the Xeinadin Accountancy and Business Advisory Group and support clients across the UK and Ireland. Call us on 0330 124 7740; email your usual Centurion adviser or use IndirectTax@Xeinadin.com Expert VAT support is just a call away.
This article is for general information only and specific advice should be sought as required.