VAT help.

valentino46

hi guys,

whn filling in a vat control account with figures given, would a the vat on a bad debt written off in the current vat quarter be reclaimed and shown as a credit entry in the vat account as it is the equivalent of a credit note entry??

bit unsure of how to deal with this.

thanks guys

rob

sdv

Before the VAT can be claimed back for a bad debt the following must have happened
1) The out-put vat tax must have been paid to HMRC
2) The sales invoice must be at least 6 months old
3) The bad debt has been written off

When you write off the band debt; original sales entries must be reversed.

SLCA (Credit)
Sales (Debit)
VAT (Debit)

From the above it is clear that the VAT Control account MUST be DEBITED when a bad debt is written off

valentino46

postings

ok,

thanks.

so in reason the vat becomes a form of input tax as we need to reclaim it?

sdv

Although in the control account the VAT appears on the Debit side,

BUT when file the VAT RETURN (Vat Form)

The Input vat (debits) are not increased; instead

The OUTPUT vat (Credits) are reduced.

The Net Effect of VAT payable will not change

valentino46

thanks for help