I am intrested to hear how other firms deals with bad debt. The example I have is that we had a compnay go into adminstration, the same day this company went into admin the going concern of the business was sold, all that was left was the debt and it's fixed assets. 

My question is should we leave the debt on a sales ledger for 6 months until we can claim back the vat and write the debt off to bad debt, or should I write the debt off to bad debt now and reclaim from the bad debt the vat again in 6 months. 

This is the first bad debt in 6 years hence never really had much to do with it, any advice would be much appreacited .

Thanks

HI,

If you're sure the debt isn't recoverable, I would take it off the sales ledger now, simply because of the distortion to your figures.

You can't reclaim the VAT until the debt is 6 months old, and then it's simply a question of adding it to the input tax on your VAT return.

MoK