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CCH Software User Documentation

Bad Debt Relief Adjustment

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Bad Debt Relief

How do I correct the VAT Return boxes which are affected by a bad debt relief transaction posted by the CCH Practice Management integration?


These notes are based on HMRC guidance (as at January 2022) and are restricted to advising how to post adjusting entries to the VAT return in Twinfield so that the figures are reported in the relevant VAT return boxes in Twinfield.  You should refer to the HMRC guidance notes to understand the full rules around Bad Debt Relief.


Claiming bad debt relief

From HMRC guidance notes, the following is explained.

“2.4 How to claim bad debt relief

To claim a refund, you should include the amount of the VAT you’re claiming in box 4 of your VAT Return which covers the date when you fulfil the conditions to make a claim.”

When a bad debt adjustment is posted via CCH Practice Management the following transaction is created in Twinfield

Using an example transaction of Invoice £100 + £20 VAT which has been written off


Adjusting journal required to Twinfield for bad debt relief


We recommend creating the following additional VAT codes in Twinfield to allow these adjustments to be identified in the audit trail.

See creating a new VAT code


Adjusting Journal

With the recommended additional VAT codes created, the following journal can be posted to Twinfield to make an adjustment to the VAT return boxes.

This adjustment is based on the example of a bad debt write off £100 + £20 VAT


Receiving payment for a written off invoice

If a customer pays a debt which has been written off, the guidance says;

“3.14 If you receive payment after claiming bad debt relief

If you have claimed a refund under this scheme and you later receive a payment for the supplies, you must repay to us the VAT element included in the payment. All payments you receive for the supply or supplies must be shown in your separate bad debt account. When you’re repaying all or part of your refund, put the amount you’re repaying in box 1 of your VAT Return for the period in which you received the payment.”

Posting via the bank statement screen

  • Split the amount receive on the bank statement between net and VAT values.
    • Code the net amount to bad debt general ledger account using the NO VAT for the VAT code
  • Code the second tab to bad debt
    • Select the S-BDRE VAT rate
    • Amend the VAT amount by clicking on the padlock and entering the total VAT amount
    • Amend the Base amount value to 0.00




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