Andrew Needham looks at how to claim bad debt relief and points to look out for.
The basic rules are that businesses that have accounted for VAT on a supply that remains unpaid six months after the due date for payment (not the invoice date) can claim the VAT back from HMRC.
Businesses that have purchased goods and claimed the VAT back have to pay the VAT back to HMRC if it has not paid for it six months after the invoice date.
Tips when claiming bad debt relief
When a business leaves a VAT group it is still entitled to claim bad debt relief (‘BDR’) on debts incurred while it was part of the VAT group. It does not matter that the supply was originally accounted for by the representative member of the VAT group.
Supplies made by
