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HMRC internal manual

VAT Repayment Supplement Manual

HM Revenue & Customs
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The law and legal powers: the law

Section 79(1) VAT Act 1994 requires HMRC to increase the amount reclaimed on a VAT return, and refunds claimed under sections 33, 33A, 33B and 33C VATA when certain conditions are met, by an additional supplement equal to 5% of that amount or £50, whichever is the greater.

The qualifying conditions set out in section 79(2) are:

  • that the requisite return or claim is received on time,
  • the written instruction directing the making of the payment or refund is not issued by the Commissioners within the relevant period,
  • the amount shown on the return or claim as due by way of payment doesn’t exceed the actual payment or refund due by more than 5% or £250, whichever is the greater.

Section 79(2A) sets out the relevant period of 30 days and sections 79(3) and (4) provides that when computing the 30 days certain matters may be left out of account, which are:

  • periods relating to the raising and answering of any reasonable inquiry,
  • the correction by the Commissioners of any errors or omissions in the return or claim,
  • in relation to payment of the return, any continuing failure to submit returns and compliance with any condition referred to in paragraph 4(1) schedule 11.

VAT regulations 198 and 199 also apply and make provision for how the time taken to make repayment is calculated. However the regulations were not amended when section 79(4) VAT Act was introduced. As primary legislation section 79(4) takes precedence which means the wording in regulation 199(a) is not appropriate.