Blog

business summed up

KSK Accountants Milton Keynes – Chartered Accountants RSS Feed Blog

Reclaiming VAT on old debts

If you’re VAT-registered, unless you qualify to adopt the cash accounting scheme, VAT you charge has to be paid over to HM Revenue & Customs based on invoices raised, not cash received. So you may regularly have to pay VAT you have not received.

Many people overlook the fact that, if a customer or client has not paid by the end of six months, the VAT can be reclaimed following a procedure set out by the Revenue (including maintaining a “refund for bad debts” account). Unlike direct tax relief for bad debts, you don’t have to make a judgement on whether the person concerned is ever going to pay you. It’s a completely mechanical six-month test. So, if you are suffering from slow payers and are in need of something to help your cash flow at the moment, you might want to look at the VAT in your aged debtors.

« Back to blog

Leave a Reply

Your email address will not be published. Required fields are marked *