In a recent case led by Vaughn Chown (VAT Partner, Vantis), on behalf of the liquidators of Times Right Marketing Limited (Times Right), the VAT Tribunal (the Tribunal) has allowed the Times Right claim for VAT bad debt relief on invoices not paid by an insolvent customer but offset by relevant input tax.
This is a significant success and relevant for all insolvency practitioners and businesses struggling to pay VAT.
The Tribunal held that bad debt relief is available to Times Right, to the extent that it had claimed input tax relief (i.e. the VAT it had paid on its purchases) in its VAT Returns, despite the fact that the VAT due to be paid on the submission of a number of the returns had not in fact been paid. Times Right is therefore entitled to a refund of VAT of approximately £180,000.
For further details, or to discuss how this decision may affect your business, contact Vaughn Chown.