You can write off one or more entries by selecting them in the customer's account window (Cu button on the main toolbar) and clicking on the WOF button that appears on the toolbar above the entries. The WOF button automatically writes off the gross amount to the Expenses: Write offs/discounts account and does not affect VAT.
VAT is not automatically reclaimable on bad debts written off as there are certain conditions that must be met (For details of your obligations in this respect please refer to HMRC guidance here).
One of these conditions is that the debt written off and the amount of VAT should be shown in a separate bad debts account.
To facilitate this, the gross amount of the debt should be written off to the bad debts account using the WOF function. Once the conditions for reclaiming the VAT have been met, you can then post a journal using the JRN function (see Journals), to transfer the VAT amount from the bad debt account to the VAT input account.
For this reason, a credit note should not be raised to write off a bad debt where output VAT was accounted for to HMRC.
