Tag Archives: HMRC-advice

VAT: New guidance on repayment interest

By   2 February 2023
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HMRC has published new guidance on repayment interest – in cases where HMRC is late in settling a repayment claim for overpaid VAT.

If HMRC is late in paying an amount representing a repayment, ie; when a return shows more input tax than output tax, or a claim is made for VAT previously overpaid, a business may be entitled to repayment interest on the VAT that it is owed. From 1 January 2023 repayment interest replaced the repayment supplement.

Amount of interest

Repayment interest is paid at the Bank of England base rate minus 1%, with a minimum rate of 0.5%.

Start date

VAT already paid to HMRC

The day after the later of these two dates:

  • when the VAT was paid to HMRC
  • the payment deadline for your accounting period

VAT not paid to HMRC

The day after the later of these two dates:

  • the payment deadline for the accounting period
  • when the VAT return or claim was submitted

End date

Repayment interest ends when HMRC either repays the VAT or sets it off against a different VAT or tax amount that is deemed to be owed.

Notes

  • any retrospective claims are subject to the unjust enrichment rules
  • repayment interest is not due if there are any outstanding VAT returns
  • HMRC will not pay interest on early payments of VAT
  • if payment on account businesses pay instalments that exceed VAT owed, repayment interest begins on the date the return was due
  • in cases where HMRC demand a VAT security, and it is not paid, no repayment interest will be due

VAT: Updated guidance – Non-Statutory Clearances Service

By   21 July 2022
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HMRC has published new guidance on the non-statutory clearance service available for all businesses and their advisers.

Non-Statutory clearances

A Non-Statutory clearance is a mechanism where a person can ask HMRC in writing for guidance or advice in certain circumstances. The guidance sets out how to use this procedure. The service is limited, however, and HMRC will only advise if the applicant:

  • has fully read the relevant guidance or contacted the relevant helpline
  • has not been able to find the information required
  • is uncertain about HMRC’s interpretation of tax legislation

However, HMRC will not respond if

  • it is not given all the necessary information —checklists at Annex D (for VAT) provide details of what is required
  • it does not think that there are genuine points of uncertainty – it will explain why HMRC think this and direct the applicant to the relevant online guidance
  • if  HMRC think the clearance request is to give tax planning advice, or to approve tax planning products or arrangements
  • the application is about treatment of transactions which, in HMRC’s view, are for the purposes of avoiding tax
  • HMRC is checking the applicant’s position for the period in question, in which case queries must be directed to the officer dealing with the inspection
  • it is a clearance on matters of fact, such as if certain activities constitute a business
  • there is a statutory clearance applicable to the relevant transaction

HMRC is currently not dealing with postal applications, so a request must be sent by email to nonstatutoryclearanceteam.hmrc@hmrc.gov.uk

HMRC will usually reply within 28 days, but say where difficult or complicated issues are involved it may take longer. If this is the case, HMRC will acknowledge a request and tell the applicant when they can expect a full reply. VAT non-statutory clearance requests are currently taking around 12 weeks to process.

Appeal

There is no general right of appeal against advice given by HMRC, except where rights to appeal are set out in statute.

Appeal rights are usually against decisions HMRC take, such as issuing an assessment for underpaid tax or a penalty.

However, some VAT related decisions are classed as ‘appealable decisions’ by statute. The letter HMRC sends will explain if the applicant is able to appeal and what to do if the applicant disagrees with a VAT decision.

Relying on HMRC advice

There has been changes to such reliance, set out here. HMRC explain when its advice is not binding here.