SolvedCH146490 | Interest: repayment interest: special provisions for VAT: recovery of overpaid repayment interest as late payment interest
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.
Where an amount of repayment interest has been paid to a person which ought not to have been paid a special provision allows HMRC to recover the amount as if it were late payment interest if all the following conditions are met -
repayment interest has been paid to the person in respect of an amount that is, or relates to, VAT for a prescribed accounting period,
an assessment or amendment to an assessment is made of the amount of VAT payable by the person for the accounting period, and
as a result of the amendment or assessment it appears to HMRC that some or all of the repayment interest ought not to have been paid
Additionally, where:
HMRC has paid repayment interest and,
as a result of the common period rule (see CH146470), the repayment interest ought not to have been paid, that repayment interest can be recovered as if it were late payment interest.