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Post Info TOPIC: VAT on a bad debt
hamster_tango


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VAT on a bad debt
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Hello,

I am about to submit Q4 08 VAT return and would much appreciate a view on this please! 
A customer has failed to pay a bad debt, we have been through small claims but no response at all.  Therefore they now have a CCJ and we have not got our money.
I would like to reclaim the £428.96 VAT which we paid to the revenue in Q3 08 which we failed to collect from this customer (we pay the VAT on the assumption that we will recieve payment in full from our customers, this is the first non-payment we have had in 4 years - sign of times unfortunately)

Should I deduct the total amount of VAT £428.96 off the Outputs? do you think this would be okay?  I would record it appropriately.
(I operate a single entry system using Excel)

Many thanks
Janis H.

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Dustin57


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Yes simply deduct the VAT on the bad debt from box 1 on the return. If you used a system such as Sage or QuickBooks you would raise a credit note to clear the debt and send the expense to bad debts written off in the profit and loss account. I would also amend box 7 of the return for the net amount of the bad debt written off.  



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