Jurisdiction(s):
United Kingdom

Key definition

Debt definition

What does Debt mean? Debt, in pensions practice, is the sum an employer must pay to an occupational defined benefit pension scheme to meet any funding shortfall when the employer ceases to participate or the scheme winds up. In England & Wales and Scotland, this employer debt (commonly the section 75 debt) is a statutory liability under section 75 of the Pensions Act 1995 and the Occupational Pension Schemes (Employer Debt) Regulations 2005. It is typically calculated on a buy-out basis (the estimated cost of securing members’ benefits with an insurer) and becomes immediately due to the trustees on a trigger such as...

UK VAT bad debt relief and credit notes: eligibility, calculation, timing, payment allocation, administration, VAT groups, and purchaser input tax adjustments

Published by a LexisNexis Tax expert

Practice notes

This Practice Note explains how a taxable person who has declared and remitted VAT on a supply, yet does not receive the price for that supply, can seek a repayment, in full or in part, of the VAT paid. This covers cases where consideration is not in fact received.

There are separate routes depending on the facts:

where, after the time of supply, the supplier agrees to repay or reduce the price charged, the adjustment is dealt with under the credit note rules
where the price remains unpaid (in whole or in part) and the supplier ultimately writes it off as irrecoverable, the claim is addressed under the rules on bad debt relief

This Practice Note focuses mainly on the VAT bad debt framework, but, to set matters in context, it also gives a short outline of the credit note provisions explained above.

EU law

Under Council Directive 2006/112/EC (the VAT Directive), VAT on a supply is due by reference to the taxable amount (or value) of the supply, being everything that forms the consideration received or to be received by the taxable person (from any person) for that supply. The corollary is that VAT is not chargeable on more...

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Shanzé Shah

Old Square Tax Chambers

Shanzé is developing a busy and broad-ranging practice across all areas of tax law. She advises on both contentious and non-contentious matters, with particular experience in Inheritance Tax, Capital Gains Tax, Income Tax, VAT, SDLT, domicile and residence, the taxation of charities and trusts, and private client matters including wills.In 2025, Shanzé completed a secondment in the private wealth and tax team of a leading private client law firm, where she gained valuable experience advising high-net-worth individuals, trustees, and charitable bodies. Prior to specialising in tax, she worked at the Government Legal Department and gained legal experience across multiple jurisdictions, including China, India, Canada, and Greece. Shanzé is a member of the Attorney General’s Junior Junior Panel and has experience successfully appearing in court unled. She is regularly instructed in advisory work and litigation across a wide range of tax disputes and...

Web page updated on 22/05/2026

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