Principles of repayment supplement: when is repayment supplement treated as a VAT credit
Sections 79(1)(a) and (5)(a) VATA make it clear that where section 79 applies, the amount of VAT credit claimed on a return under section 25(3) is increased by the addition of a further amount, that is the repayment supplement. However the repayment supplement is not a freestanding thing itself as it is not to be treated as a VAT credit for the purposes of determining the amount of the repayment supplement.
In support, section 79(1) suggests that the repayment supplement ought to be paid at the same time as the VAT credit in respect of which it arises ‘the amount….shall be increased by the addition of a supplement…’
However a supplement paid to a body or proprietor in respect of a claim made under sections 33, 33A, 33B or 33C VATA is treated as an amount due by way of refund under those provisions and is not therefore considered a VAT credit under section 25 VATA.