SolvedCH146450 | Interest: repayment interest: special provisions for VAT: requirement to give security as a condition of releasing a VAT credit
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.
As a condition of allowing or repaying input tax, VAT law gives HMRC the power to require a person to give a security if it thinks it is necessary for the protection of the revenue,
See paragraph 4(1A) of Schedule 11 to VATA 1994 and detailed Securities guidance at SG29000.
If HMRC gives a person a Notice of Requirement to give a security and the person fails to comply with the notice, a special provision applies so that repayment interest is not paid for the period
beginning on the date the notice requiring the giving of security is given by HMRC, and
Ending on the date on which HMRC receives the required security
This special provision only applies to VAT credits. It does not apply where HMRC is repaying an amount that has been paid to HMRC.