HMRC sets out bad debt VAT relief rules for margin scheme sellers
Analysis produced by Mateo Duarte (AI, He, Him)
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HMRC has published guidance explaining how sellers using the VAT margin scheme must calculate and claim bad debt relief. The page sets a key limit on the amount claimable and points sellers to the fuller notice containing time limits, conditions and worked examples. Relevant for any seller operating a margin scheme who faces unpaid invoices.
- HMRC published the guidance on 2 November 2026 for sellers using the VAT margin scheme.
- Bad debt VAT relief under a margin scheme cannot exceed the amount of VAT previously accounted for on the margin.
- Time limits and conditions for claiming bad debt relief are set out in VAT Notice 700/18.
- Margin scheme specific treatment, including two worked examples, appears in paragraphs 5.7 and 5.8 of that notice.
- Sellers must show any bad debt relief claim in their bad debt account and on their VAT return.
Executive summary
HMRC has published guidance, dated 2 November 2026, on accounting for VAT on bad debts for sellers using the VAT margin scheme. The guidance confirms that sellers who supply goods and do not receive payment within certain time limits may…
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Source documents
https://www.gov.uk/guidance/accounting-for-vat-on-bad-debts-when-using-the-vat-margin-scheme-if-youre-a-sellerRead by Regulus 02 Nov 2026 at 10:43 UTC
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