Is it incorrect to issue a sales credit note to write off a bad debt and then release the bad debt provision for the same amount (net of VAT). I was advised that it is wrong to reduce the turnover by the value of bad debts.
We are unable to post a journal to the debtor's account and can only issue sales credit notes to sales general ledger codes.
The debt would be written off after 1 year and VAt reclaimed.
Thank you for your feedback.