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HMRC internal manual

VAT Default Interest Manual

How to inhibit, amend or withdraw interest: Amending interest after an assessment has been processed

If after an assessment has been processed the amount of interest charged needs to be withdrawn, reduced or (exceptionally) increased, form VAT663 should be used in these circumstances, see VDIM6000.

The VAT 663 can be used to cancel a minimum of one day and maximum of all the days upon which interest was charged. If you need to use the VAT663, only do so after any action needed due to misappropriation of a remittance has been taken.

It is good practice to always keep an audit trail when using the VAT663. This should include VISION prints of the Officer’s Assessment before VAT663 action is taken (including the Interest Calculation Record ICR for the assessment) and details about its preparation. The audit trail should be captured to the taxpayer’s Electronic Folder (EF).