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HMRC internal manual

VAT Refunds

Unjust enrichment: Reimbursements: Statutory interest

Where the sums being reimbursed were overpaid because of an error by HMRC statutory interest will be paid. 

Any statutory interest paid under this scheme is subject to the same terms and conditions as any other credit or repayment returned under the scheme and must be refunded to consumers. This is because it is the consumer who did not have use of the money, not the claimant who collected it from them to pay to HMRC.

Interest is calculated on a simple, rather than compound, basis. Any statutory interest must be refunded in full, any residue must be returned to HMRC within the specified time limit of 14 days.

If the claim has problems working out how much interest is due to his customers, we should provide a print-out of the statutory interest calculation, which shows interest on a period by period basis.

The claimant will then be able to divide interest payable for a particular period into the amount overpaid or overstated for the same period. This should determine approximately what is due to customers for a particular period.