VSIM7400 - Processes and procedures: Payment on Account taxpayers

This guidance deals with interest matters in respect of prescribed accounting periods starting on or before 31 December 2022. Interest matters with effect from 01 January 2023 are dealt with under Finance Act 2009.

Please see Compliance Handbook page CH140000 onwards to find the new interest rules guidance.

When determining the applicable period for statutory interest (SI) in relation to a claim from a taxpayer who pays his VAT returns through the Payment On Account (POA) system, the interim payment date needs to be taken into account.

The amount declared as due on the VAT return is considered to be paid when the return and payment have been received as with normal returns. However, the interim payments in POA represent advance payment of the return liability and are required to be paid at the end of the second and third months of each quarter. If a taxpayer is late making a payment they will be assessed for default surcharge.

In view of the above and reasons of equity the applicable period where a POA taxpayer has overpaid VAT due to official error will start from the date the interim payments are paid. Where the taxpayer has failed to claim credit due to official error the applicable period will start from the date the interim payment was due.