- The reform of VAT Return Penalties and Interest from 1 January 2023 introduced automatic Repayment Interest (RPI) for delayed VAT payments due back to taxpayers.
- This is the first time since VAT was introduced over 50 years ago that such a system has been implemented.
- The new regime calculates interest at Base Rate minus 1%, with a minimum of 0.5%, and will be repaid to taxpayers on any VAT due to be repaid to the taxpayer from the day after the due date or the date of submission until the day HMRC pays the repayment.
- This fairer RPI system will be particularly helpful in current periods where taxpayers make VAT return claims or disclosures and these are held up by HMRC delays. Prior to the change, taxpayers had to show that they had suffered a delay in respect of repayment return claims to get any interest from HMRC.
- Periods prior to 1 January 2023 will not be subject to the automatic payment of RPI. However, where taxpayers have waited ‘too long’ for their repayment, it is possible to proactively seek repayment of interest ‘in certain cases of Official Error’. Given that RPI will now be being calculated automatically for more recent periods, it is hoped HMRC will speed up their repayment processes generally.
Source hlca.co.uk
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