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

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Personal Tax

Payment of tax due under self assessment

Payment of tax due under self assessmentNormal due dateIndividuals are usually required to pay any outstanding income tax, Class 2 and Class 4 national insurance, and capital gains tax due for the tax year by 31 January following the end of the tax year (ie 31 January 2025 for the 2023/24 tax year).

14 Jul 2020 12:52 | Produced by Tolley Read more

Owner-Managed Businesses

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more

Trusts and Inheritance Tax

Tax on UK resident beneficiaries of non-resident trusts ― overview

Tax on UK resident beneficiaries of non-resident trusts ― overviewIntroductionUK resident beneficiaries of non-resident trusts are subject to UK tax on payments or benefits received from the trust. They are liable for income tax on income distributions from the trust and they may also be liable to

14 Jul 2020 13:47 | Produced by Tolley Read more

Autumn Budget 2024

��Ƶ