Andrew Needham highlights some potential issues when making a bad debt relief claim for VAT purposes.
The basics of claiming bad debt relief (BDR) are that when an invoice has remained unpaid, or partly unpaid, for six months after the due date for payment, it is possible to claim BDR on the outstanding amount from HMRC on the VAT return covering the period when the BDR becomes claimable. If the debt is eventually paid, the business has to pay the VAT back to HMRC on its next VAT return.
However, there can be some twists to claiming BDR that businesses should be aware of, to make sure they get the full amount, and don’t fall foul of HMRC.
VAT-only invoices
Some businesses may raise VAT-only invoices from time to time, such as when they have failed to charge VAT in error or when they are dealing with
