Can you benefit from Bad Debts Relief?

In these difficult economic times, North West manufacturing businesses are experiencing problems in collecting all their outstanding debts. It is possible to reclaim part of the outstanding debt from HMRC in certain circumstances.

Are you making full use of VAT Bad Debt Relief?

Unless you are using the Cash Accounting Scheme you must account for VAT when you raise a sales invoice and then wait for payment. If you are still waiting to be paid over 6 months later you may claim bad debt relief i.e. claim the VAT back from the taxman.

In my experience of dealing with Lancashire based manufacturing companies, this relief can easily be overlooked. The North West is seeing difficult times and cash flow is especially tight for many businesses. I think that where possible tax relief should be taken.

Here at Ashworth Treasure Accountants in Lytham, we have dealt with this area many times and are often asked how best to account for bad debt relief. If you have incurred bad debts where the due date for payment was any time in the last 4 years and you have not recovered the VAT on the debt, it may not be too late to claim to recover this VAT.

If you are involved with a manufacturing business in Lytham, or further afield in Lancashire or the North West and would like to talk about specific tax advice with a specialist firm of accountants, then please get in touch.