VAT games

Our client sells toys and games online. It is based and VAT-registered in the UK. We need advice on VAT and accounting for output tax on the following sales.

First the client has been naive with some of the sales made by credit card (total value £5 000) and failed to meet the checking conditions of the credit card issuer a leading UK bank. The customers in question were fraudulent and the bank has refused to pay the client for these sales because it is out of pocket.

As I understand it the point of transaction creates an output tax liability for credit card sales – he uses the cash accounting scheme – so presumably he will need to wait six months to recover the VAT under the bad debt relief rules.

Second for other sales the user was fraudulent but my client met the...