10. Bad debt relief
What bad debt relief is and how to claim it.
If you have made supplies of goods or services to a customer and you have not been paid for them, you may be able to claim relief from VAT on the debts you have incurred as long as you can meet all the statutory requirements of the bad debt relief scheme.
You’ll find more information about the scheme in Relief from VAT on bad debts (Notice 700/18).
Find out how bad debt relief claims can be made on the VAT Return when the insolvent business remains registered for VAT.
You can use the online form to reclaim VAT when the VAT registration has been cancelled.
Extra-statutory concession relieving office holders from input tax clawback provisions
An extra-statutory concession has applied from 26 November 1996 which relieves office holders or insolvent traders from the need to repay us input tax when:
- supplies were made to the insolvent trader prior to the relevant date
- no payment has been made
- notification that bad debt relief has been claimed by the supplier is received on or after the insolvency date
The extra-statutory concession has been updated from 1 January 2003 to take account of the cessation of the requirement for suppliers to write notifications as a condition of making a claim for bad debt relief.