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Bad Debt Relief

Statutory Basis: VAT Act §20

What statute says​

Value Added Tax Act, 2014 (as amended by the VAT (Amendment) (No. 2) Act, 2021), s. 20 sets out the four-criteria test for bad debt relief. A registered person can recover VAT already remitted on supplies that remain unpaid after the statutory conditions are met:

  1. The debt is at least 12 months old from the invoice date
  2. The debt has been written off in the registrant's books
  3. The registrant has taken reasonable steps to recover the debt
  4. The original supply was a taxable supply on which output VAT was accounted for

The legal policy is corrective: if output VAT was paid on a supply that is not ultimately collected, the law may permit relief to avoid permanent overpayment.

The legal policy is corrective: if output VAT was paid on a supply that is not ultimately collected, the law may permit relief to avoid permanent overpayment.

What platform does​

CoralLedger Comply tracks receivable ageing, flags debts approaching eligibility, and supports write-off workflows tied to return adjustments. Once confirmed, relief values are carried into the relevant return output with audit traceability.

Reports and history views provide period-by-period transparency on claims, supporting internal control and regulator queries.

Customer responsibility​

You must verify that each debt satisfies statutory eligibility and that supporting evidence is retained. If post-claim payments are later received, your team must account for required reversals in subsequent returns.

Comply helps operationalize the process, but legal entitlement and supporting evidence quality remain your responsibility.