This paragraph covers the provisions for late payment interest which apply for VAT return periods starting on or after 1 January 20231.
Overview of late payment interest regime
FA 2009, s 101 sets out the circumstances under which late payment interest is to be paid to HMRC for periods starting on or after 1 April 2022. Regulations (known as the Taxes and Duties, etc (Interest Rate) Regulations2) outline the rules in accordance with which the rate of interest payable to HMRC is to be determined. The rate is set at 2.5% above the Bank of England base rate. This interest is payable on a simple (rather than a compound) basis3.
In broad terms, interest is calculated from the day on which the amount to which the interest relates becomes due and payable4 until the date on which the payment or repayment is made5.
Background to introduction of harmonised interest regime
There has been a long history of efforts to
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Web page updated on 17 Mar 2025 13:47