Tag Archives: VAT-adjustments

VAT Bad Debt Relief Noticed updated

By Marcus Ward 1 October 2025

HMRC has updated VAT Notice 700/18 – Bad Debt Relief (BDR). The update covers how and when a claim may be made.

The Notice explains when a business is entitled to BDR and how to claim it.

If a business makes supplies of goods or services to a customer but it is not paid it may be able to claim relief from VAT on bad debts that it has incurred.

The conditions for claiming BDR are:

a business must have accounted for the VAT on the supplies and paid it to HMRC
a business must have written off the debt in its day-to-day VAT accounts and transferred it to a separate bad debt account
the value of the supply must not be more than the customary selling price
the debt must not have been paid, sold, or factored
the debt must have remained unpaid for a period of six months after the later of the time payment was due and payable and the date of the supply
the deadline is within four years and six months of the later of the date payment was due and payable or the date of supply

These rules have varied over the years, so it is worth checking on supplies made before 1 April 1989.

To claim BDR a business includes the amount of the VAT being claimed in box 4 of its VAT return which covers the date when the conditions to make a claim are fulfilled.

If BDR has been claimed and subsequently a payment is received for the supply, a business must repay HMRC the VAT element included in the payment.

VAT: Error corrections – two new updates and a helpful flowchart

By Marcus Ward 9 September 2025

VAT Notice 700/45 How to correct VAT errors and make adjustments or claims has been updated. The Notice sets out how to amend a business’ VAT records if errors have been made, how to correct errors on VAT returns, and how to claim a refund if VAT declarations have been overstated. The changes are:

information on how and when to correct VAT errors
what happens if corrections are not made
information about claiming input tax
more information about how underpayments and overpayments are paid
HMRC’s response time after receiving an error correction
clarification of the unjust enrichment rules
the reimbursement scheme
how HMRC repays interest owed on overpayments

Additionally, HMRC’s guidance: Check how to tell HMRC about VAT return errors has been updated.

This guidance explains the requirements for updating a VAT return, and how to make a correction online or tell HMRC in writing about errors. The update states that it is no longer possible to correct errors on VAT returns using form VAT652.

Basically, the guidance sets out how to report errors of £10,000 or more (net of all errors). This broadly comes down to using the online service or adjusting a current VAT return.

Please see our flowchart on error reporting Error Reporting Flowchart

HMRC internal manual: VAT Assessments and Error Correction update

By Marcus Ward 21 October 2024

HMRC’s manual VAT Assessments and Error Correction was updated on 15 October 2024.

This internal guidance is for HMRC inspectors (but is equally useful for advisers) covers assessments and error correction. The amendments apply mainly to General assessment procedures: Importance of avoiding delay.

The manual covers:

It also refers to for the most up-to-date guidance on reasonable excuse CH160000.as a defence against penalties and interest.