Few people know that HMRC must pay the taxpayer a 5% penalty for VAT repaid late, the 5% obviously relating to the amount of VAT paid late.

HMRC have 30 days to repay a VAT claim unless they are conducting reasonable enquiries. The 30-day clock starts as soon as you submit that claim and stops when one of 2 things happens. Either HMRC are actively making enquiries, or they have asked the taxpayer for documents or answers. As soon as HMRC even temporarily stop actively pursuing the claim, or the questions they have asked have been answered, the clock starts again. Many Officers forget about the clock and go over the limit because very few people ask for a Repayment Supplement.

If you have been paid late and didn’t receive a repayment supplement, you should write to HMRC and ask for one. You will receive a full breakdown of the time spent on your case if HMRC dispute your claim and you have the opportunity to appeal to the HMRC Tax Tribunal if you still disagree.