Unpaid VAT as bad debt

[xoggoth]

Retired from contracting nearly three years back and when I deregistered from VAT I paid the amounts on outstanding invoices.

However, one such invoice was not paid in full. I eventually got a portion back from the client's administrators but there was no mention of any part of it being VAT.

Would it be correct to treat the VAT I overpaid as a bad debt in the accounts? Ta for any opinions.

[Robot]

Retired from contracting nearly three years back and when I deregistered from VAT I paid the amounts on outstanding invoices.

However, one such invoice was not paid in full. I eventually got a portion back from the client's administrators but there was no mention of any part of it being VAT.

Would it be correct to treat the VAT I overpaid as a bad debt in the accounts? Ta for any opinions.

You paid VAT on the outstanding sales invoice; did you ever recover the VAT when you treated this as a bad debt OR is the outstanding sales invoice sitting in the sales ledger? (Never been treated as a bad debt).

If you never recovered VAT via bad debt relief, then I would ignore the VAT element, as you have already paid the VAT and treat the recovered amounts as

a) bad debt recovered (P&L) or
b) Sales ledger (balance sheet).

Robot

[ASB]

Xog,

By implication you must have been using accruals accounting for vat not cash accounting? Also is the entity which has the benefit of the debt still trading?

Check out form VAT427 and guidance. It might fit you circumstances.

Oh, linky. http://www.hmrc.gov.uk/vat/managing/...el-reclaim.htm

[xoggoth]

Cheers for comments. VAT rereg requires one to pay for VAT on outstanding invoices. I later wrote off the VAT exclusive part in accounts as it seemed I would get little or nothing at the time and the bit I did eventually get will go back in as recovered bad debt. No allowance was made for the VAT.

I didn't realise I might be able to get some back from VAT lot, from all the guff when I deregistered I had the impression it was final. I probably can't treat something as a bad debt unless I make some effort to recover it.