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HMRC internal manual

VAT Repayment Supplement Manual

HM Revenue & Customs
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Reduction or recovery of a repayment supplement: reduction of a repayment claim or return

One of the qualifying conditions for entitlement to repayment supplement (RS) is that the amount shown on the return or claim does not exceed the amount actually due by 5% or £250, whichever is the greater.

Where a claim is subsequently reduced by an officer’s assessment or error correction which results in the net amount on the return to have been over-claimed by more than the tolerance, RS will no longer be due.

Alternatively as RS is calculated as a percentage of the net amount claimed, only a portion may need to be recovered if there is still an entitlement but the net amount claimed on the return is reduced.

If it is found that there is now tax due for the period (that is, taking account of the return and assessment or voluntary disclosure) which exceeds the amount on which RS was originally paid by 5% or £250, RS will have been overpaid.

The Repayment Supplement team is notified automatically where an officer’s assessment or error correction is processed for a period on which RS has already been paid. In all circumstances the Repayment Supplement team will establish the value of the RS overpaid and take action in accordance with VATRS06100 to recover it.