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HMRC internal manual

VAT Repayment Supplement Manual

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HM Revenue & Customs
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Principles of repayment supplement: when is repayment supplement payable

Repayment supplement (RS) is only paid in respect of undue delays in authorising repayments claimed on a VAT return or a section 33, 33A, 33B or 33C VAT Act claims subject to certain qualifying conditions.

Section 33 VAT Act 1994 applies specifically to refunds of VAT to:

  • local authorities,
  • river purification and water development boards,
  • internal drainage boards,
  • passenger transport authorities,
  • port health authorities,
  • police authorities,
  • certain development corporations,
  • general lighthouse authorities,
  • the BBC,
  • certain nominated news providers, and
  • any other body specified by Treasury Order.

Section 33A applies specifically to refunds of VAT to museums and galleries.

Section 33B applies to refunds of VAT to academies.

Section 33C applies to refunds of VAT to certain charities.

RS does not apply to delays in making other refunds such as claims made through error notifications or claims for statutory interest. This is because other claims for refund do not meet the qualifying conditions prescribed in section 79(2) of the VAT Act 1994.

Information on the qualifying conditions can be found in VATRS03200.

Support can also be taken from the Upper Tribunal decision in Our Communications Ltd (FTC/87/2012) dated 26 November 2013. The first tier Tribunal had allowed a repayment supplement on VAT credits claimed as a voluntary disclosure (error notification). HMRC appealed and the Upper Tribunal held a different view to the first tier Tribunal. On the basis of the wording of the provisions of section 79 VATA the Upper Tribunal agreed with HMRC overturning the first tier Tribunal’s decision.

Note: Section 79(6) VAT Act 1994 provides a clear definition of ‘requisite return or claim’.

You should refer any requests for RS for the delayed payment of voluntary disclosures or other refunds to the Repayment Supplement team.