Commentary

700/18/20 Relief from VAT on bad debts

Part V8 HMRC Notices
Part V8 HMRC Notices | Commentary

700/18/20 Relief from VAT on bad debts

Part V8 HMRC Notices | Commentary

700/18/20
Relief from VAT on bad debts

June 2020

This notice cancels and replaces Notice 700/18 (December 2002).

1 Overview

1.1 What this notice is about

If you make supplies of goods or services to a customer but you are not paid you may be able to claim relief from VAT on bad debts you have incurred.

This notice explains:

  1.  

    •     when you're entitled to this relief;

  2.  

    •     how to claim it.

Also, you may have to repay VAT you have claimed if you have received supplies of goods or services which you have not paid for.

This notice also explains:

  1.  

    •     when you will be required to repay input tax;

  2.  

    •     how you will be required to repay it.

Main narrative treatment—V3.421, V5.156.

1.2 Who should read this notice

Anyone registered for VAT who has made supplies of goods or services to a customer for which they have not been paid, and anyone who has received a supply of goods or services and has not made payments for the supplies.

1.3 The law covering this notice

The law that governs the claiming of bad debt relief is:

VATA 1994s 36; and
s 26A which covers the repayment of input tax when a customer fails to pay for supplies received within six months of the relevant date
VAT Regulations 1995Parts XIX and XIXA and XIXB

1.4 Background

Since the introduction of bad debt relief there have been various changes made to its availability, the way it operates, and the time-limits that apply. As a general rule, relief must now be claimed within

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