VAT repayment supplement

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of when HMRC would be expected to pay a repayment supplement to a business.

The VAT repayment supplement has been replaced by a revised repayment interest regime for periods beginning on or after 1 January 2023. See the Interest ― repayment interest on VAT credits or overpayments guidance note.

This guidance note therefore deals only with the rules as they apply to periods beginning before 1 January 2023.

When is HMRC required to pay the repayment supplement?

If HMRC does not authorise payment of a legitimate refund claim within 30 net days from receipt of the VAT return, it is liable to pay the business a repayment supplement which is a form of compensation.

The 30 days’ time period normally runs from the date that the VAT return was received by HMRC. However, if the VAT return is received before the end of the VAT return accounting period, the 30-day period will not start until the first day of the following month.

Legislation allows HMRC to effectively stop the

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