SolvedCH146420 | Interest: repayment interest: special provisions for VAT: payments on account - example
From HM Revenue & Customs · Compliance Handbook
You must check whether, and from which date, the FA 2009 interest rules apply to the tax or duty you are dealing with. See CH140160 for full details.
A business in the POA regime is required to make payments on account of £300,000 on 31 March 2023, £300,000 on 28 April 2023 and the balancing payment by 31 May 2023 for the accounting period ending 30 April 2023.
They make the following payments on account
Payment due on 31 March 2023 (POA 1 - £300,000) paid on 31 March 2023.
Payment due on 28 April 2023 (POA 2 - £300,000) paid on 28 April 2023.
When they submit their VAT return the total amount payable for the accounting period is £500,000.
As they have overpaid by £100,000, they are due a repayment and repayment interest.
HMRC repays the £100,000 on 16 June 2023. Repayment interest is paid from the repayment interest start date of 31 May 2023 which is the date on which the VAT return was due. It is paid for 16 days from 1 June 2023 to 16 June 2023, inclusive.