Bad Debt Vat Relief

Bad Debt Vat Relief

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I have a Bad Debt. The VAT on the original Debt was 17.5% but it seems that HM Revenue & Customs are going to restrict me to reclaiming VAT at the temporary 15% rate if I reclaim it before January 2010.

Surely this can't be legal. ...........the VAT man gets a 2.5% cut for doing nothing !!

It looks like unjust enrichment to me !
Ade Wesley

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By User deleted
13th Jan 2009 16:32

I don't think that is correct
Whilst the legislation does suggest that the VAT refundable has to be calculated using the VAT fraction (where the sum is a VAT-inclusive amount and particularly required where part of the debt has been paid, to establish the VAT amount attributable to the residue) I am not aware of anything that says you have to use the VAT fraction currently in force. It would be nonsensical to use any fraction other than that used to calculate the VAT in the first place. If your reasoning were correct, do you really think HMRC will be prepared to refund more VAT than was paid over, when the rate reverts to 17.5%?

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