I have a client who is approaching VAT registration threshold. He has £18k of bad debt, and wants to know if this can be discounted as part of the £79k. I think not, because A) it wont have been formally written off by the time he hits £79k, and B) because bad debt doesn't affect sales, but appears as an expense.
The bad debt does not reverse the revenue to which it relates but as you say is recognised through the P&L as an expense.
VAT of course goes on the revenue figure.
kind regards,
Shaun.
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Shaun
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