Importance a day makes

HMRC’s liability to make a repayment supplement

The taxpayer claimed a VAT repayment of £18 323 on its January 2016 return which was filed on 1 February 2016. HMRC requested further information on 29 February which the taxpayer provided. HMRC concluded the review on 1 March and confirmed that the repayment had been forwarded for authorisation.

HMRC authorised the VAT repayment on 3 March and it was made to the company on 8 March with a supplement of £916. Two days later HMRC issued an assessment cancelling the repayment supplement on the basis that it had been paid ‘in error’. This was because the delay had been 30 days rather than 31 and was therefore not outside the time period set out in VATA 1994 s 79.

Under this HMRC must pay a supplement if a VAT return repayment is delayed by more than 30 days...