Andrew Needham considers whether claiming bad debt relief is as straightforward as it seems and looks at two areas that can cause confusion.
The basics of claiming bad debt relief (BDR) are contained in VATA 1994, s 36, and permit BDR to be claimed from HMRC when an invoice remains unpaid, or partly unpaid, for six months after the due date for payment 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 also don’t fall foul of HMRC.
VAT only invoices
Some businesses may raise VAT only invoices from time to time when they have failed to charge VAT in error, or when they are dealing
