SLfT6005 - Determining the amount of a claim for bad debt relief

SLfT guidance on determining the amount of credit that can be claimed in relation to bad debt relief, including attributing payment and writing off debts.

You can normally claim credit for the amount of SLfT you charged on the disposal relating to the bad debt.

However, you must offset against the amount of the bad debt:

  • any amount that you owe the customer (a mutual debt);
  • the value of any enforceable security that you have in relation to that customer.

‘Security’ in this context means:

  • in relation to Scotland, any security (whether heritable or moveable), any floating charge and any right of lien or preference and right of retention (other than a right of compensation or set-off);
  • in relation to England, Wales and Northern Ireland, any mortgage, charge, lien or other security;

and

  • any part payment made by the customer for the debt.

In any or all of the above cases, your claim to credit can only be for the same proportion of SLfT that the outstanding bad debt forms of the whole consideration for the disposal.

For example:

  • total charge for disposal - £182.50 (including £82.50 SLfT which has been paid);
  • payment received - £90;
  • amount of debt - £92.50;
  • bad debt relief claimable - £92.50/£182.50 × £82.50 = £41.81.

The Scottish Landfill Tax (Administration) Regulations 2015 regulations 18, 20 and 25

Attribution of payments

If you have more than one debt with your customer (including debts relating to non-taxable or non-waste transactions) and your customer makes a payment to you, this payment should be attributed firstly to the oldest debt, then to the next oldest debt if there is a remainder, and so on. No attribution should be made, however, if the payment was allocated to a debt by the customer at the time of payment and the debt was paid in full.

Where the earliest debt and the other debts (or the debts to which the balance of payment could be attributed as above) to which the whole of the payment could be attributed arose on the same day, the payment shall be attributed to those debts by multiplying (for each such debt) the payment by a fraction, of which:

  • the numerator is the amount remaining unpaid in respect of that debt; and
  • the denominator is the amount remaining unpaid in respect of all those debts.

The Scottish Landfill Tax (Administration) Regulations 2015 regulation 23

Writing off debts

The whole or any part of the consideration for a taxable activity shall be taken to have been written off as a bad debt where any of the following apply:

  • the customer has become insolvent:
    • through sequestration or bankruptcy or entering into any accommodation with the customer’s creditors; or
    • by going into insolvent winding up or by entering administration;
  • because of the insolvency of the customer you have (to any extent) not been able to recover the consideration;
  • you have written it off in accounts as a bad debt; or
  • you have made an entry in relation to that activity in the landfill tax bad debt account (see SLfT6004). This applies regardless of whether a claim can be made in relation to that activity at that time.

The Scottish Landfill Tax (Administration) Regulations 2015 regulation 25

Ref ID: 
SLfT6005
Archive Date: 
12 March 2015
Last updated: 
12 March 2015
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