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HMRC internal manual

VAT Default Interest Manual

Commercial restitution: Assessments which represent commercial restitution in part

In some cases it will be obvious that an assessment of interest would only partially represent commercial restitution. This may be for part of the amount assessed or for part of the period for which interest is due.

For example this may be the case if output tax is assessed where some of the recipients of the supplies are not taxable and some are taxable or when the supplies were made to a partly exempt company.

If a supplier claims his customer was partially exempt you will need written consent from the customer to view their records in order to assist the supplier. Without this consent there is a risk of breaching taxpayer confidentiality and interest should be charged in these circumstances.

If at the time of the assessment you can see some of the tax requires an interest charge and some does not, you should put the tax on separate lines of the VAT 641/642 inhibiting as appropriate.