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HMRC internal manual

VAT Default Interest Manual

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HM Revenue & Customs
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Circumstances affecting default interest: Pre-repayment credibility queries

When verification of a pre repayment credibility query shows an adjustment is needed, you may only charge interest if a net payment is found to be due and an assessment has been made under VAT Act 1994 Section 73 (or recovery assessment legislation). 

All assessments under S73 carry a liability to interest under S74. In cases where a lesser repayment has been found to be due, there is no assessed tax to form the basis of an interest charge. For more information on returns which are the subject of credibility queries see guidance VAEC8300 VAT Assessment & Error Correction.

Manual interest assessments will be necessary in a pre-credibility situation as a VAT641 is not used.