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HMRC internal manual

VAT Default Interest Manual

From
HM Revenue & Customs
Updated
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When to inhibit, amend or withdraw interest: VAT assessments involving suspected fraud

Generally interest should not be inhibited on an assessment if the case is pursued for fraud. However in cases where a best judgement assessment is issued in advance or during an investigation into behaviour, it is better to inhibit the interest until the case is concluded. 

This will allow for any payments made on account during the investigation to be included manually when determining the interest charge (the interest suite is not programmed to carry out this function).