Bad debt relief is not available to third party insurers, even if all rights inherent to that debt are transferred to them.
An insurance company was compensating policyholders with respect to unpaid debts. The compensation paid by the insurance company to one policy holder included most of the debt amount plus the corresponding output VAT. The insurance company thought to recover this VAT under the bad debt relief rules, from the relevant authorities, which denied it, arguing that the insurance company could not claim bad debt relief with respect to a transaction that it had not carried out. The CJEU confirmed that position stressing out that the taxable person carrying out the transaction did receive consideration for their supply, therefore that the debt could not be considered as unpaid.
Source: dlapiper.com
