CH146040 - Interest: Repayment Interest: General rule

You must check whether, and from which date, the FA 2009 interest rules apply to the tax or duty you are dealing with. See CH140160 for full details.

Repayment interest runs from the repayment interest start date until the repayment interest end date.

The general rule for when HMRC pays repayment interest depends on whether the amount was originally paid to HMRC or whether it became payable because of a return or claim.

When counting the number of days for which a person is liable to repayment interest, you count the days from the repayment interest start date until the repayment interest end date. This means that if the repayment interest start date is 31 January 2013, and the amount was repaid on 1 February 2013, then the person is eligible to 1 day of repayment interest.

See CH140220 for examples of counting the number of days and CH146060 for an example of the general rule for repayment interest.

General rule for repayment of amounts paid to HMRC
General rule for overpayment of amounts on the making of a return or claim
Special provisions

General rule for repayment of amounts paid to HMRC

The repayment interest start date is the later of

  • the date on which the amount was paid to HMRC, and
  • the date on which the amount being repaid was due and payable to HMRC.

This means that where a person pays a tax liability before it is due and payable, we do not pay repayment interest on any overpaid amount between the date the tax was paid and its due and payable date.

This rule will apply to all taxes to which the FA 2009 interest provisions apply.

See example on CH146060.

General rule for overpayment of amounts on the making of a return or claim

Where an amount has not been paid to HMRC but becomes payable because of a return being filed or a claim being made, then the repayment interest start date is the later of

  • the date (if any) when the return was required to be filed, or the claim to be made, and

  • the date when the return was actually filed, or the claim actually made.

The only tax regime for which this rule currently applies is VAT from [01/01/2023 for Prescribed Accounting Periods starting on or after 01/01/2023].

The repayment interest start date depends on whether the VAT return position for a prescribed accounting period was for a net ‘payment’ or a net ‘repayment’.

Where the position for the prescribed accounting period was for a net payment and this changes to a net ‘repayment’ (VAT credit) as a result of a correction or claim, then both general rules will apply. Repayment interest will be payable on both:

(a) the amount which was paid to HMRC in respect of the prescribed accounting period

and

(b) the net VAT credit that had not been claimed for that period.

This scenario can arise where:

  • a claim is made under Section 80 VATA 1994 where a customer has over accounted for output tax on their payment VAT return,
  • a claim is made under Regulation 29 of VAT Regulations 1995 where a customer has deducted less input tax than they were entitled to on their payment VAT return.

Special provisions

There are special provisions that apply in particular circumstances, see CH146200+.

See CH149930 for a summary of the special provisions and CH149950 for a glossary of terms used.

FA09/S102
FA09/SCH54/PARA2
FA09/SCH54/PARA3
FA09/SCH54/PARA4
FA09/SCH54/PARA5