VAT bad debt relief (UK)

VAT bad debt relief can allow a supplier to reclaim VAT it has already accounted for and paid on a qualifying unpaid supply when the statutory conditions are met. HMRC’s general rule requires the debt to remain unpaid for at least six months after the later of the payment due date and the supply date, with the required write-off, records and claim. Later recovery of the debt has further consequences. A business accounting for output VAT only when the customer pays generally does not need relief for VAT it has not paid on that unpaid amount.