VAT on customer underpayments

VAT on customer underpayments

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I'm looking for  practical solution to a problem. A client receives payments from customers sometimes in foreign currency, with small underpayments of say 1%. Sometimes due to customer bank charges passed on to client. Client writes these off as an adjustment but can the VAT be reclaimed  as an adjustment without issuing a credit note or waiting for the 6 months bad debt relief?

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By Gem7321
16th Jul 2015 08:36

If we are talking EC customers then bank charges have to be shared, I can't remember the directive but I will try to find it later. So I don't think you would be able to reclaim VAT on a short payment due to bank charges. 

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By Halex
16th Jul 2015 10:57

EC Bank charges

Thanks GEM7321. I wasn't aware that there was a directive on this. Some customers are outside EU so directive won't affect them. It tests the patience of anyone trying to get to the bottom of these differences - whether charges or possible currency exchange difference at some point in customer calculation. Write off becomes the pragmatic solution so I would like to know where we stand with VAT.

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