Hi there,
I have recently invoiced a company who have since gone into administration so we wont be receiving payment. I therefore need to void the invoice or record it as bad debt. My question is, if i were to do either, will this automatically record and adjust the next VAT period so we can claim this VAT back which we have already paid?
Any advice would be appreciated.
Hi @Suzanne83
Better not to void the invoice - if it's in a previous VAT quarter, that creates an exception on the current return which is difficult to track down if you need to.
The standard way to record a bad debt would be either enter a credit note or a journal into QBO.
QB Desktop used to suggest journal (I think that's HMRC's preferred method) but QBO now suggests a credit note... https://quickbooks.intuit.com/learn-support/en-uk/help-article/customer-refunds-credits/write-bad-debt-quickbooks-online/L88pSKtr9_GB_en_GB?uid=l31kel8s
Don't actually send the credit note. If there's any money left after the Receiver has filled their pockets you might get a few £ back after all.
N.B. VAT on bad debts can be reclaimed once the debt is over six months old (from the date the payment was due) and is less than four years and six months old.
https://www.gov.uk/guidance/relief-from-vat-on-bad-debts-notice-70018
Hope this helps.
Enter your E-mail address. We'll send you an e-mail with instructions to reset your password.