Is bad debts w/o to be included in partial exmeptn

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We have written off a significant amount of debt that is now being represented as an input to the VAT return. My question is whether the VAT amount is to be included within the partial exemption calculation?

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RLI
By lionofludesch
19th Feb 2021 16:19

Did you make the sale ? Yes.

So do you include it ? Yes.

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chips_at_mattersey
By Les Howard
19th Feb 2021 17:27

I humbly disagree.
A Box 4 adjustment under BDR rules is outside your PtEx calculation. The Box 4 entry has to cancel out the original Box 1 entry to the value of the debt.

Interesting question nevertheless - you will almost certainly not find a solution in HMRC guidance.

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Replying to leshoward:
RLI
By lionofludesch
19th Feb 2021 17:54

Quote:

I humbly disagree.
A Box 4 adjustment under BDR rules is outside your PtEx calculation. The Box 4 entry has to cancel out the original Box 1 entry to the value of the debt.

Interesting question nevertheless - you will almost certainly not find a solution in HMRC guidance.

Are we agreed, Les, that any input tax on the goods sold to the bad debtor can be recovered ?

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Replying to lionofludesch:
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By Tax Dragon
20th Feb 2021 06:47

That's a different question. (To which, btw, the answer is "it depends".)

I'm all for not answering questions (especially newbie and anonymous ones). I'm not for answering questions the OP didn't ask, unless you make it much clearer than you have that that's what you're doing - gets very confusing (aka unhelpful) otherwise.

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