HC Deb 12 December 1983 vol 50 c339W
Mr. Lawrence

asked the Chancellor of the Exchequer whether he will take steps to end the requirement upon the small business man creditor to pay value added tax on a transaction in which the debtor has defaulted.

Mr. Hayhoe

It would not be practicable under the arrangements for the collection of VAT to make payment of VAT dependent on the debtor paying the creditor. Where the debt is genuinely bad a refund of VAT may be obtained, under the current arrangements for relief, when the debtor is bankrupt or is the subject of a compulsory or a creditors' voluntary winding-up.