Commentary

V7.471 The conditions for claiming bad debt relief

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.471 The conditions for claiming bad debt relief

Part V7 Tax planning | Commentary

V7.471 The conditions for claiming bad debt relief

The seven conditions for claiming VAT bad debt relief are summarised in the table below:

NumberCondition
1.You must already have accounted for the VAT on the supplies and paid it to HMRC.
2.The debt must have remained unpaid for a period of six months after the later of the time payment was due and payable and the date of the supply.
3.You must have written off the debt in your day to day VAT accounts and transferred it to a separate bad debt account.
4.The debt must not have been paid, sold or factored under a valid legal assignment.
5.The value of the supply must not be more than the customary selling price.
6.The claim must be made within four years and six months of the later of the time payment was due and payable and the date of the supply. (In some circumstances, VAT bad debt relief can be claimed in relation to supplies made between 1 April 1989 and 30 April 1997.)
7.Appropriate records must be kept for a period of four years from the date of making the claim.

We will now look at each of the

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