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HMRC internal manual

VAT Statutory Interest Manual

From
HM Revenue & Customs
Updated
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Amount on which statutory interest is calculated: No liability to pay statutory interest on incorrectly imposed penalties or interest

Statutory interest is not payable on incorrectly levied penalties or default interest. This is because they are not VAT and therefore do not fall within the scope of section 78(1) (a) to (c).

VATA section 78(1) (d) (delayed payment of an amount in connection with VAT) however allows payment of statutory interest where repayment of incorrectly levied penalties and interest is unreasonably delayed due to official error.

VATA S78(1)