Claiming VAT bad debt relief (BDR)

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of VAT BDR provisions. For an overview of the VAT implications on a customer who has not paid for a supply of goods and services, see the Bad debt relief ― repayment of VAT by the debtor guidance note.

For a video overview of the bad debt relief provisions, see the Bad debt relief video.

What are the conditions required to claim VAT relief on bad debts?

A business can recover VAT paid to HMRC on supplies of goods and services if the customer has not paid and the following conditions are satisfied:

•
the business must have charged VAT at either the standard or reduced rate
•
the VAT charged must have been accounted for to HMRC
•
the VAT amount must have been written off in the VAT accounts and have been transferred to a special VAT bad debt account
•
the value of the supply must not exceed ‘open market value’
•
the debt must not have been transferred, sold or factored under a

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Trusts and Inheritance Tax

Outright gifts

Outright giftsAn outright gift is the most straightforward type of gift. It simply involves the outright transfer of property from one person to another with no conditions attached.This type of gift is most suitable for clients who want to pass over modest amounts, or give to responsible and capable

14 Jul 2020 12:22 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more

Employment Tax

Long service awards

Long service awardsEmployee recognition by an employer can be an important motivational tool, as well as having a positive effect on retention. Most employer awards made to an employee are treated as taxable earnings under ITEPA 2003, s 62 or as a benefit under ITEPA 2003, s 201 because they are

14 Jul 2020 12:11 | Produced by Tolley Read more

Personal Tax

Interest and penalties on late paid tax under self assessment

Interest and penalties on late paid tax under self assessmentInterestIf the capital gains tax, the balancing payment or payments on account of tax and / or Class 4 national insurance contributions (NIC) are paid late, HMRC will charge interest on the amount overdue from the original due date. The

14 Jul 2020 12:00 | Produced by Tolley Read more

��Ƶ