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6
2003

creditors

is there a time limit for creditors to be left on a balance sheet. I have a client who has been carrying some creditors forward for several years and I would imagine that the 'other side' will have claimed bad debt relief by now although I don't know for sure. My client is struggling at the moment as it is !

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I always use a common sense approach......

if for example there is an old creditor at year end that appears next year end, firstly i would go over the balances with the client.

the fact the creditor exists means that an invoice or something was received at some point. Talking to the client about the balances often provides "funny" stories as to why the balance wasnt paid, disputes over quality, job never completed, paid personally by a credita card or even barter or offset arrangements.

First port of call for me is discuss old creditor balances as early as possible (cleints memories tend not to be the best) and adjust according to the answer.

This may result in writing back costs, paying off via drawings/DLA if paid personally etc.  Depending on the response from the client there may also be VAT adjustments for VAT cliamed on the original transaaction or invoice.

Not a fancy complicated answer, just a bit of common sense.

Cheers

 

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avatar
11th May 2012 12:27

Six months for input VAT

Presumably your client will already have made an entry to repay the input tax on the creditors that are over 6 months old [VATA 1994, s 26A].  

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By Hansa
11th May 2012 14:38

old history

In the early '80's I did some work with XXX  (Motor leasing) and discovered huge numbers of credit balances.  I discovered that for a 36 month lease they would take 3 months "initial payment" ... + a Standing Order for 35 months! 

Practically no-one noticed and thus they ended up with 2 extra payments on most contracts.

They kept these additional payments in a general  creditors suspense account - and took them to profit after 6 years! 

Not very honest - and this from a PLC group! 

 

*edit: name of the guilty redacted!

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avatar
11th May 2012 14:14

Do you really want to leave

Hansa

Do you really want to leave that on a public forum - bit risky

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By Hansa
11th May 2012 14:37

Yes

bernard michael wrote:

Hansa

Do you really want to leave that on a public forum - bit risky

As it is true (and provable) I see no reason why not :-)  However discretion being the better part of valour, I'll "redact" the name to protect the guilty! 

Thanks for your concern.

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By tom123
12th May 2012 06:59

Whereas nowadays the car leases continue to take a triple first payment anyway, with no suggestion it is a deposit.

 

Sounds like what used to be deposits is now a convenient source of extra revenue :)

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