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HMRC internal manual

VAT Assessments and Error Correction

Recovery assessments: Recovery of statutory interest under Section 78A

When you are making a recovery assessment, whether under Section 80(4A) or under section 73(2), you may also need to assess for recovery of any related statutory interest which was paid to the trader.

The legal powers for recovery of statutory interest are in Section 78A VAT Act 1994.

Assessments under section 78A can only be made where the amount to be recovered was paid on or after 18 July 1996.

Time limits

The time limits are contained in Section 78A(2) and you have 2 years from evidence of facts in which to make an assessment.

Recovery of statutory interest under section 78A

Prepare VAT 641 using a “00/00” period, Attribution Code 9 and Type Code “0”. Once input, this will put the debt on file and avoid corrupting any accounting period details for misdeclaration penalty and interest purposes.

The output document produced by the computer should be suppressed and the assessment notified by letter.