26 July 2026 · How To
How to Claim It on Your VAT Return
You claim VAT bad debt relief by entering an adjustment in the 'Adjustments' column of Box 1 of your VAT return, for the VAT amount only — never the net invoice value and never the VAT on the whole original invoice if the customer paid part of it. The adjustment must be made in the tax period in which all four Article 64 conditions are finally satisfied, which is usually the period of the write-off and notification if the six-month period had already run its course. Keep supporting evidence — the original invoice and the return it was reported in, proof the output VAT was paid, the write-off entry in your accounts, the age of the debt, and the notification sent to the customer — because the FTA can request it on review at any time.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Where it goes
The mechanics of the claim are simple once the conditions are met: the relief is entered as a negative adjustment in the 'Adjustments' column of Box 1 of the VAT return, reducing the output tax due for that period. Only the VAT element of the written-off amount goes into this box — the net value of the goods or services is not adjusted anywhere on the return, because the underlying supply and the original output tax declaration both remain correct as originally reported. The adjustment belongs in the period in which the last of the four conditions is met, which means a business needs to track exactly when the six-month clock runs out and when the write-off and notification actually happened, not simply claim in whichever return is convenient.
- Enter the relief in the Adjustments column of Box 1.
- Only the VAT amount, never the net invoice value.
- Claim in the period the last condition is satisfied.
- The original output tax declaration is not amended or reversed.
- Do not wait for a convenient period — use the correct one.
- A late claim in the wrong period can draw FTA scrutiny.
Evidence to keep
Because bad debt relief reduces the VAT payable, it is exactly the kind of adjustment the FTA can ask to see support for, so the evidence file matters as much as the return entry itself. At minimum, keep the original invoice and confirmation it was reported in a filed VAT return, proof the output VAT on it was actually paid, the accounting entry showing the debt was written off with the date and amount, a record of the date of supply establishing the six-month period, and a dated copy of the notification sent to the customer. Businesses that keep this evidence together at the time of the claim, rather than trying to reconstruct it later, are in a far stronger position if the FTA opens a review.
- Original invoice and the return in which it was reported.
- Proof the output VAT on the invoice was paid.
- The write-off entry in the accounts, dated and for the right amount.
- The date of supply, to prove the six-month test.
- Dated notification sent to the customer.
- Keep the file together at claim time, not reconstructed later.
How the Box 1 figure is calculated
Say a Dubai business issued an invoice for AED 210,000, made up of AED 200,000 for the work and AED 10,000 of VAT at 5%, and paid that AED 10,000 to the FTA in the period the invoice fell in. The customer later paid AED 105,000 and then stopped, leaving AED 105,000 unpaid — AED 100,000 net plus AED 5,000 VAT. Once the debt is written off, six months have passed since supply, and the customer is notified, the claim is for AED 5,000 — the VAT portion of the amount actually written off, not the VAT on the original AED 210,000 invoice, because half of that VAT was already paid by the customer and never at risk.
- Only the VAT on the unpaid portion is claimed.
- A part-paid invoice needs the unpaid share recalculated, not the whole VAT amount.
- The claim figure should tie exactly to the write-off entry.
- Round to match how the amount is recorded in the accounts.
Correcting a mis-claimed adjustment
Mistakes happen — a business might claim in the wrong period, claim the gross amount instead of the VAT only, or later discover the customer paid after the adjustment had already been made. In each case, the correction is a further adjustment: over-claimed relief is reversed as additional output tax in a subsequent return, and where the amount involved is significant the standard voluntary disclosure process applies rather than simply netting it off quietly in the next filing. Catching and correcting these errors promptly is far less costly than leaving them for the FTA to find during a tax audit, where the same error can attract penalties on top of the VAT itself.
- Over-claimed relief is reversed as output tax in a later return.
- Significant errors should go through voluntary disclosure.
- Catch and correct errors before an FTA audit finds them.
- Keep a note of any correction alongside the original evidence file.
Related guides
Frequently Asked Questions
Common questions on making the claim correctly on the VAT return.
Where on the return do I claim?
In the Adjustments column of Box 1, for the VAT amount only — this reduces the output tax payable for that period rather than being claimed as a separate refund.
When do I make the adjustment?
In the tax period in which all four conditions — VAT paid, debt written off, six months passed, and customer notified — are finally all met together, which is usually the period of the write-off and notification if the time test had already run.
What evidence should I keep?
The original invoice and the return it was reported in, proof of the output VAT paid, the write-off entry in the accounts, the date of supply, and the dated notification sent to the customer — all held together as one file for that claim.
Do I claim the gross invoice or just the VAT?
Just the VAT amount on the unpaid portion. The net value of the supply is never adjusted, and if the customer part-paid the invoice, only the VAT on the remaining unpaid balance is claimed.
What if I claim in the wrong period?
The claim should be corrected — either by adjusting a later return or, for larger amounts, through a voluntary disclosure — rather than left as is, since an FTA review can identify the timing error and apply penalties.
What if the customer pays after I claim?
You must reverse the relief already claimed, as additional output tax in the period the payment is received, because the underlying condition of non-payment no longer holds for that amount.
Can Exiloz make the adjustment?
Yes. We calculate the correct VAT figure, confirm the right claim period, enter the Box 1 adjustment, and hold the supporting evidence file in case the FTA asks for it.
Claim it correctly
Exiloz calculates the right VAT figure, enters the Box 1 adjustment in the correct period, and keeps the evidence file the FTA expects to see.