News & BlogShare Could You Claim Bad Debt Relief? Bad debt is a situation that occurs when an individual owes money that cannot be recovered. This is usually something that happens during a business transaction; such as a customer who is refusing to pay for a product or a service, which leaves you paying for them. When you find yourself in this situation, the cost of the non-payment can send you reeling. Before you continue down the line of bad debt relief, you should ensure that you have tried every other option. Including having the customer contacted by your solicitor. This is because you will be required to write off the debt to benefit from bad debt relief. Basically, you won’t get the money you’re owed. Try to get the customer to pay the invoice for the amount due before taking any other actions. There are a number of ways to solve a non-payment situation, and unless the customer has completely cut contact, there is no reason to go straight to applying for bad debt relief.EligibilityThere are a few conditions that must be met when applying for bad debt relief.You must have supplied goods or services in exchange for a sum of money that you have not received.You must have taken a reasonable number of steps to try and recover the amount owed.You must have written off the amount owed as bad debt in your accounts.The debt should not have been paid, sold or passed to another company.You must have accounted for the VAT of the supplies (for the goods or services rendered) and paid it to HMRC.The value of the supply cannot have exceeded its market value.The goods should be in the ownership of the customer who has not paid.If these conditions are satisfactorily met, then you may very well be eligible for relief.Making A ClaimTo make a bad debt relief claim, you will need several things. First, you will need a copy of the VAT invoiced for the supplies you are claiming a refund for. Second, you will need a bad debt account which shows:The amount you have written off.The amount of VAT you wish to claim.VAT period in which you have claimed a refund.Total VAT charged on each supply of goods.VAT period where you originally accounted for VAT on the supply.The payment received for each supply of goods.The name of your customer.Date and number of the unpaid invoice.Copy of any notice issued to the customer.If your claim for relief is only based on one supply of goods, for which you have received no payment, you can claim the full amount of VAT you accounted for and paid to HMRC originally. However, if you have received part payment from the customer, then you are only eligible to claim relief on the VAT that relates to remaining unpaid amount.At Debtcol, we specialise in helping business owners who are struggling with bad debt, overdue invoices or difficult customers. Whether that’s helping you refine your invoicing process, communicating with customers who haven’t paid, or guiding you through the legal processes of debt collection. If you have any questions about claiming bad debt relief, or you would like to know more just get in touch today. OR COMPLETE THE FOLLOWING FORM AND WE WILL SEND YOU MORE INFORMATIONPlease complete all fields below Forename Surname Company Email address Share Useful links to related information Why You Really (Really) Need Terms and Conditions Why We Prefer To Settle Debt Problems Without Legal Action Your Options If You’re Owed MoneyBACK TO IN THE PRESS