Bad
Debt Relief Changes
October
2002 |
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| The
Budget last April announced that it was intended to make changes
to the VAT bad debt relief rules and there followed a period
of consultation. The outcome of the consultation has now
been announced and regulations are to be made implementing the
changes. |
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The
main change is that whereas at present it is necessary to issue
the customer with a notification that bad debt relief has been
claimed, in future this will no longer be necessary. The
customer upon receipt of such a notice was previously then required
to adjust his VAT return to repay to Customs any input VAT that
had been claimed on the original supply. Under the new
rules there will be an automatic repayment required of any input
VAT claimed on invoices that remain unpaid for six months. |
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| One
of the concerns that arose from the consultation was that there
was potential difficulty in ascertaining the date from which
the customer would be required to repay input tax. Repayment
is due six months from the date of supply or, if later, the
due date for payment. However, in some situations the
date of supply can be different from the date of invoice.
In order to avoid uncertainty Customs will now, for this purpose,
take the date of invoice as the due date for payment so that
any input tax reclaimed will become repayable six months after
the invoice date, unless a later due date has been agreed. |
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These
changes will apply in respect of any supplies made on or after
1st January 2003.
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Rights Reserved | © S R Lynn & Co 2003 | 11 Warren Yard,
Wolverton
Mill, Milton Keynes, MK12 5NW | Photography by Stephen Lynn