If a supplier has made a positive rated supply for which he has not been paid, he may claim a refund of the VAT accounted for as output tax by making a claim for bad debt relief.

The relevant legislation is VATA 1994, s. 36 and Regs 166-172 of The VAT Regulations 1995 (SI 1995/2518).

There are six main conditions for making a claim:




The sales invoice is over due for ‘payment’ by at least six months from the later of:

1the due date for payment for the supply; and

2the tax point

s. 36(1)(c)

Reg 172(1A)


The claim is made within four years and six months from the later of the above two dates.

Reg 165A(1)

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