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HMRC internal manual

VAT Default Interest Manual

HM Revenue & Customs
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Circumstances affecting default interest: Redundant registrations

The main aim of default interest is to provide commercial restitution for the loss of monies to the Exchequer and there is no reason why it should be any different when dealing with redundant registrations. 

Accordingly, if you raise a manual tax assessment then you should also raise a manual interest assessment if commercial restitution applies. The exception should only be where it is clear the redundant taxpayer is unable to pay the tax assessment for example due to insolvency.

The manual assessment should follow similar procedures to the manual tax assessment as outlined in VAEC3562 (two copies to the taxpayer, of which one is a remittance advice, one copy to Southend and one to the taxpayer’s electronic folder). The appropriate DMU must also be notified to enable the debt to be pursued.

If an assessment or error notification is subsequently amended or withdrawn, or an over declaration is notified, the interest assessment will also need to be amended as appropriate. Manual recalculation of the interest will be required and the taxpayer notified of any changes.