Calculation of interest: Overview of interest procedures
VAT 641/ VAT 642 are input including the calculation date (the date the assessment was made or different if appropriate)
- computer output document shows tax liability and any interest due and the OA calculation date.
Outputs are received in the local office and checked for accuracy
- if they are incorrect the process is abandoned using a VAT646
- If everything is correct the form should be date stamped with the issue date and the issue date is then keyed into VALID on a VAT645.
If all interest bearing tax is paid within 30 days of the issue date no further interest will be due.
If all interest bearing tax is not paid within 30 days of the issue date the computer calculates further interest from the OA calculation date until the date of issue of the further interest assessment. The taxpayer is notified of further interest every month on a VAT658 or VAT559 until, subject to time limits, all the interest bearing tax is paid.
When the taxpayer makes a payment
- If the money goes on file as an OA remittance, further interest demands will stop when VISION recognises that the interest bearing tax has been paid in full, and the calculation date is set to 99/99/99 or the time limit has been reached.
- If the money goes on file as an unaccompanied remittance although VISION will show the money on the ledger, it will need to be appropriated to the assessment. Until this happens it will continue to be liable to interest. If appropriation does not happen automatically you will need to issue the appropriate instructions to Accounting and Adjustments, see VDIM7050.