Repaying VAT on bad debt

Deleted member 24925 · Jun 14, 2009

Hi

Advise please-Bad Debt written off in accounts and VAT reclaimed, have now received payment of just over 50% of this bad debt and need to repay HMRC the VAT element

What transactions do I need to make to
1. enter the full amount of cheque received &
2. repay HMRC the VAT element

Any help appreciated

wood1e2 · Jun 14, 2009

I am presuming here, but add back in just over 50% of sale figure and just over 50% of VAT amount to your next VAT return.

that should cover it, at the end of the day you probably didn't notify the VAT office that you had a bad debt, so I would just do that add back in both sales and VAT figure to reflect your bad debt clearance.

RAL · Jun 14, 2009

You just to amend vat return manually. Add vat amount to Box 1.

Have read http://www.hmrc.gov.uk/vat/managing/reclaiming/bad-debts.htm#7

David Griffiths · Jun 15, 2009

The transaction still has to be recorded in the records.

Assuming a computer accounts system of some kind, simply record a bank receipt, with the net amount credited to bad debts account in the profit and loss and the VAT set at the appropriate rate - the original claim may well have been at 17.5%.

That assumes that the full invoices have been written out of the system when the bad debt relief was claimed. Above all it assumes invoice accounting for VAT, not cash accounting.

Lots of assumptions but the OP didn't give a lot of detail

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Repaying VAT on bad debt

Deleted member 24925

wood1e2

RAL

David Griffiths

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