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Bad debt relief: Was the appellant entitled to adjust its daily gross takings figure more than four years after the debt became due?

By Andrew Needham, February 2020

This was an appeal against HMRC’s refusal to allow an adjustment to the Daily Gross Takings (‘DGT’) on a bespoke retail scheme agreement (‘BRSA’) for the purpose of accounting for VAT to HMRC. It was accepted that it paid over VAT to HMRC on sales for which it had received a cheque that was later dishonoured, and that in the period 5/12/96 to 6/2/2003 it did not reclaim this VAT.

In its VAT return for the period 01/2018, it made an adjustment to reclaim this VAT in the amount of £1,876,141.00. HMRC refused to accept the adjustment.  

Both parties agreed that the appellant was entitled to use a simplified accounting procedure in the form of a BRSA and was entitled to reclaim Bad Debt Relief (‘BDR’).

Both parties were agreed that the appellant’s bespoke retail scheme, in common with any

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