Commentary

BB/20/04 VAT—gas and electricity suppliers: new extra-statutory concession for bad debts

Part V16 Forms and other HMRC material

BB/20/04 VAT—gas and electricity suppliers: new extra-statutory concession for bad debts

BB/20/04 VAT—gas and electricity suppliers: new extra-statutory concession for bad debts

business brief, Issue 20. 2 August 2004

This Business Brief article outlines a new Extra-Statutory Concession, enabling suppliers of gas and electricity to obtain relief from VAT on debts owed by domestic customers, after the suppliers have accepted the transfer of a domestic customer and their debt from another supply company.

Background

The VAT Bad Debt Relief scheme enables VAT-registered businesses to recover some or all of the VAT they have declared and paid in respect of their supplies, where their customer has failed to pay. Under the terms of the scheme, the person who makes the supply is the only person entitled to claim VAT Bad Debt Relief.

This concession supports Government policy to allow greater flexibility for domestic fuel and power consumers by enabling them to change suppliers even if they have a debt.

Changes

The ESC applies where a domestic customer who is in debt to one

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