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Bad Debt Relief

Statutory Basis: Value Added Tax Act, 2014, s. 53 (post-supply adjustment due to bad debt)

What statute says​

Value Added Tax Act, 2014, s. 53 provides for a post-supply adjustment where a registered person has accounted for output VAT on a supply that is subsequently not paid. Under s. 53(3), the relief arises on the date the bad debt is written off in the accounts of the registrant — not after a fixed elapsed-time wait. There is no 12-month threshold in s. 53.

To claim relief, the registrant must have:

  1. Accounted for output VAT on the original taxable supply
  2. Written off the debt in its accounts — this is the event that makes relief available under s. 53(3)
  3. Retained evidence of the debt and of reasonable steps taken to recover it

If a debt on which relief was claimed is later paid, the relief must be reversed in a subsequent return.

The 12-month age is a prompt, not the trigger

CoralLedger Comply surfaces debts that are more than 12 months outstanding as candidates to consider writing off — a convenience heuristic, shown as a "Review From" date. The 12-month age is not the statutory eligibility condition; relief becomes available when the debt is written off in the accounts under s. 53(3).

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.