Commentary

RCB/14/07 VAT—changes to the rules on bad debt relief for goods supplied on credit terms

Part V16 Forms and other HMRC material

RCB/14/07 VAT—changes to the rules on bad debt relief for goods supplied on credit terms

RCB/14/07 VAT—changes to the rules on bad debt relief for goods supplied on credit terms

Revenue & Customs Brief, Issue 14. 14 February 2007

This article concerns changes to the bad debt relief provisions in respect of claims relating to goods supplied on credit terms, including hire-purchase, conditional sale and credit sale agreements. The new rules reflect existing commercial accounting methods and result in a more accurate bad debt relief figure for the supplier.

Background

In VAT Information Sheet 05/04 (Division V16.5) we set out our policy on claims relating to overpaid VAT following conclusion of the litigation in the case of General Motors Acceptance Corporation UK Ltd. We then explained, in VAT Information Sheet 05/06 (Division V16.5), the changes we were making to close a loophole concerning goods sold, for a second time, by finance companies. We also announced in paragraph 6 of that Information Sheet that we intended to amend the bad debt relief rules to allow businesses to use the same basis for

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