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HMRC internal manual

VAT Default Interest Manual

Calculation of interest: The reckonable date

This is the start date for the interest calculation and is defined in section 74 (5) of the VAT Act 1994, see VDIM2030

The start date of interest depends on the type of return involved for the period in question.

  • Payment returns - the due date for the period plus one day
  • Repayment returns - the repayment authority date plus 7 days (this date is available from the “Live Period Details” screen on VISION). If an assessment converts a repayment return to a payment return then the reckonable date will change. The part of the assessment equivalent to the repayment return amount will still be included from the repayment authority date plus 7 days, but the balance will be included from the due date for the period plus one day. However the Interest Calculation Record will still show the return as a repayment return.
  • Period more than 3 years old - if the period in error is more than 3 years prior to the calculation date on the tax assessment a 3 year limit is applied, see VDIM2040. This means that although the reckonable date may be earlier, the line of the assessment will not be included within the interest calculation from any earlier than 3 years prior to the calculation date of that assessment.

For example an Officer’s Assessment made on 11 October 2009 covering 15 years with quarterly periods up to 06/09 would carry interest on the full amount (if commercial restitution applies) as follows:

* all accounting periods over 3 years old - from 11/10/06 to 10/10/09
* all accounting periods up to 3 years old - from due date plus one day