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HMRC internal manual

VAT Bad Debt Relief

HM Revenue & Customs
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Payments: Example of attribution for goods supplied with finance under hire purchase, conditional sale or credit sale agreements: Input tax to be repaid to HMRC by defaulting customers

Defaulting customers who are required to repay to HMRC VAT they have previously reclaimed on supplies of goods made to them must continue to use the old method (the ‘straight-line’ method), whether the supplies were made before, on or after 1 September 2006.