Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

VAT Retail schemes guidance

Mail order traders: Bad debts: General

It is recognised that mail order traders would encounter genuine problems in complying with the normal requirements of claiming bad debt relief because they cannot identify the precise supply to which a bad debt relates. A relaxation has therefore been agreed which accepts that it will not be necessary for mail order traders to identify the precise supply to which the claim relates.

An apportionment can be applied to the figure of outstanding debts over six months old. The apportionment will reflect the ratio of standard to zero-rated supplies. In agreeing an appropriate method of apportionment, officers may consider a rolling calculation. This is because the standard/zero split at the time the debt is written off for the purposes of the relief may be significantly different to the split at the time that the supply had actually taken place and tax accounted for.

To establish that a period of six months has elapsed from the time when payment is due, or (if later) from the time of supply, an average period of time for debts entering the default account should be agreed. If this agreed period is under six months then a claim would still not be appropriate until the balance of the six months had elapsed.