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HMRC internal manual

VAT Default Interest Manual

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HM Revenue & Customs
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The law and legal powers: Reckonable dates

VAT Act 1994 Section 74 states that interest is due from ‘the reckonable date until payment’. The reckonable date is the start date for the interest calculation and is defined in section 74 (5) of the VAT Act as follows

‘(5) The references in subsections (1) and (2) above to the reckonable date shall be construed as follows -

(a) where the amount assessed or paid is such an amount as is referred to in section 73(2)(a) or (b), the reckonable date is the seventh day after the day on which a written instruction was issued by the Commissioners directing the making of the payment of the amount which ought not to have been repaid or paid to the person concerned; and

(b) in all other cases the reckonable date is the latest date on which (in accordance with regulations under this Act) a return is required to be made for the prescribed accounting period to which the amount assessed or paid relates; and

(c) in the case of an amount assessed under section 73(7) the sum assessed shall be taken for the purposes of paragraph (b) above to relate to the period for which the assessment was made;

and interest under this section shall run from the reckonable date even if that date is a non-taxpayer day, within the meaning of section 92 of the Bills of Exchange Act 1882.’

Section 16D of Schedule 3B of the VAT Act provides the reckonable dates in relation to special schemes and collection of UK VAT.  Sub-paragraph (2) provides the ‘reckonable date’ for the purposes of section 74(1) and (2) for any case where an amount carrying interest is an amount assessed (or could have been assessed) under section 73(2) in reliance on paragraph 16. And was correctly paid or credited to the person but would not have been had the facts been as they later turn out to be. Sub-paragraph (4) provides the ‘reckonable date’ for any other case where the amount assessed in reliance on paragraph 16 carries interest.

‘16D(2) The ‘reckonable date’ is the first day after the end of the tax period in which the events occurred as a result of which the Commissioners were authorised to make the assessment (that was or could have been made) under section 73(2).

16D(4) The ‘reckonable date’ is taken to be the latest date by which a non-UK return was required to be made for the tax period to which the amount assessed relates.

And

16D(5) Where section 74(1) and (2) (interest on VAT recovered or recoverable by assessment) applies in relation to an amount assessed under section 73(3A) (as inserted by paragraph 16A(2)), the ‘reckonable date’ for the purposes of section 74(1) or (2) is taken to be the day after the end of the tax period referred to in paragraph 16K(2).’