Share this content
0
0
770

Cash basis return for bad debts

Cash basis return for bad debts

hi everybody.

I may have a new accounting client who has not done her 2010/2011, or 2011/2012 tax return. Tut tut.

In 2010/2011, they invoiced their client (april to dec) a total of £50K. During the year they only received £20K of it. No payments received against this debt in 2011/2012 and in 2012/2013 the company is potentially putting this debt into a CVA.

Now - we need to play catch up with the 2010/2011 tax return which will show income of £50K and potentially the 2011/2012 will show a bad debt cost of £30K. It seems unfair to have to pay tax on money never received.

So my question then is, could my client do the 2010/2011 tax return on a cash received basis, and if she ever receives any payment on the rest of the income, declare that in the tax year of receipt?

Thank in advance.

Replies

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.