In this work, numerical simulations are performed to predict two-phase annular flow of refrigerant R245fa inside a 3.4 mm diameter vertical channel. The VOF (Volume of Fluid) method implemented in an OpenFOAM solver is used to accurately track the vapor-liquid interface. A 2D axisymmetric domain is considered and the Adaptive Mesh Refinement (AMR) method is applied to the cells near the liquid/vapor interface. The Reynolds-Averaged Navier Stokes (RANS) equations are solved and the k-ω SST model is adopted for turbulence modelling in both the liquid and vapor phase. Simulations are used to calculate instantaneous and mean values of the liquid film thickness at mass flux G = 100 kg m^-2 s^-1 and vapor quality ranging between 0.2 and 0.85. Numerical results are compared against measurements of the liquid film thickness taken during vertical annular downflow. Previous works from the literature and the deviations observed between present numerical and experimental results suggest the need for turbulence damping at the vapor-liquid interface by adding a source term in the ω equation. The simulations show that a low value of the turbulence damping parameter (e.g. 1) causes the average liquid film thickness to increase by 25 %–52 % compared to the non-damped scenario. The interface presents large amplitude disturbance waves in the non-damped case, whereas small ripple waves are predicted when turbulence damping is introduced. Furthermore, the difference between the application of a symmetric and asymmetric treatment for the source term is analysed. From the comparison between experimental data and numerical simulations, it emerges that the value of the correct damping source term to be applied is strictly dependent on the vapor quality.