Invoices raised in good faith can be written off if it transpires that the customer can’t or won’t pay. The VAT on the bad debt can then be reclaimed only after 6 months after the invoice date. A provision for bad debt can be made in the company year end accounts.
This policy is not to be mistaken for raising a credit note. Credit notes are raised for a number of reasons but mainly because the original invoice is incorrect, not because the debt has gone bad.
For more information please get in touch.
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