Introduction to this document

Flow chart - VAT bad debt relief

If you make supplies of goods or services to a customer but are not paid in full or in part, you may be able to claim a reduction in your VAT bill under the bad debt relief rules.

Flow chart

The Flow Chart - VAT Bad Debt Relief will help you decide if and when you can claim.

Definitions for the flow chart:

  • Written off - a debt is written off where you adjust your business records so that the amount you are owed by your customer is no longer included in debtors in your accounts receivable. This doesn’t affect your right to pursue payment of the debt
  • Commercial terms - for the purposes of VAT bad debt relief, this means a price which is not greater than the normal market value.

You can find detailed information about bad debt relief in HMRC’s corresponding Notice (700/18) at


To assist with writing the debt off, use our Notification to a Debtor of Write-off.