Commentary

V7.480 What happens if bad debt relief is claimed on a debt that is subsequently paid?

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.480 What happens if bad debt relief is claimed on a debt that is subsequently paid?

Part V7 Tax planning | Commentary

V7.480 What happens if bad debt relief is claimed on a debt that is subsequently paid?

Sometimes a customer will eventually pay a debt for which VAT bad debt relief has previously paid. See Example 10.

Example 10

The client in Example 7 pays Harry £2,500 on 4 December without specifying how the payment should be allocated. Harry should allocate the payment to the amounts outstanding in relation to invoices dated 4 March and 4 April.

Invoice dateOutstanding £Paid £
4 March100100
4 April24002400

VAT bad debt relief of £16.66 was claimed on the VAT return for the

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