The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of VAT bad debt relief provisions. For an overview of the VAT implications on a customer who has not paid for a supply of goods and services, see the Bad debt relief - repayment of VAT by the debtor guidance note.
A business can recover VAT paid to HMRC on supplies of goods and services if the customer has not paid and the following conditions are satisfied:
VATA 1994, s 36(1), (4)(a); SI 1995/2518, reg 165A(1); VBDR1500
Businesses should never issue a credit note in order to recover VAT incurred on a bad debt.
The business has the right of appeal if HMRC denies a claim
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