VAEC4400 | Recovery assessments: Default interest on recovery of VAT credit

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.

The procedural guidance in this manual only covers the VAT Mainframe and VISION processes. For guidance on the Making Tax Digital and ETMP processes for fully migrated customers, see VAEC0200 and the Making Tax Digital for VAT compliance toolkit.

The legal powers for charging interest on recovery of VAT credits are in Section 74 VAT Act 1994, the same provision as for any other assessment under Section 73. The power to assess a liability to interest arising under Section 74 is contained in Section 76.

Time limits

The time limits for assessments to default interest are contained in Section 77(2) and 74(3) VAT Act 1994.

Full guidance on default interest, and the circumstances in which it may be appropriate, see VCP10890.