Commentary

V7.474 Bad debt relief—mutual supplies

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.474 Bad debt relief—mutual supplies

Part V7 Tax planning | Commentary

V7.474 Bad debt relief—mutual supplies

Sometimes a client or customer will also be a supplier and each will owe the other money. In these situations a claim for VAT bad debt relief must assume that the amounts owing are netted off. See Example 6.

Example 6

On 4 April John the accountant issues an invoice for £1,000 plus VAT for corporation tax compliance services to an office supplies company.

On 10 May the office supplies company issues an invoice to John for £400 plus VAT for goods supplied to his firm.

Despite both of the above invoices stating that payment is due within 30

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