Bad Debt Relief – confusion concerning timing of adjustments 

The latest HFMA VAT committee minutes reported that HMRC now suggest that COS claimed in a COS year only needs to be reversed out if invoices remain unpaid at the end of the following COS year.

This contradicts HMRC’s guidance included in the July 17 HFMA minutes that adjustments should be made in the VAT return period that coincides with the sixth month of non-payment of each invoice.

Having questioned HMRC on this conflicting advice, they advised that NHS bodies should continue to apply the July 17 guidance and to make adjustments in the sixth-month of non-payment. This issue will be discussed again in the next HFMA meeting due to be held on 27 September, after which HMRC will issue further guidance.