I have a client company who has paid £105,000 for injury comensation to a sub-contractor. I need to know if this is a tax deductible payment. Accounts due inat the end of June and despite research I can't find anything out.
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despite research I can't find anything out.
Where were you researching? What reference works do you subscribe to?
Have you looked at the HMRC Business Income Manual? It’s certainly covered there.
Probably. It depends really on the detail that I can't find out.
I empathise with you over not being able to find out anything. I frequently find that on AccountingWeb. People want answers, but don't want to put a whole lot of effort into setting out their stall.
Does the company own a pub? Was the subcontractor asleep when the chimney fell on her?
I've just selected one set of facts discussed in BIM. Tax follows facts. As you provide none, you'll have to work the tax out yourself. Start at 38500.
IMHO, the best use of this forum is to provide signposts (here, BIM38500ff) to professional users. Trying to extract all the facts and then having a vote... it'll take much longer to do it right, in fact it won't be done right - and, frankly, if it won't be done right, why do it at all?
No it d0esn't. No chimneys involved!
The Compensation has been settled out of court and I need to know if I can include it in the profit and loss account.
Can I put it more clearly ?
What exactly happened ?
Was the liability covered by insurance? At the risk of stating something obvious, your client can only deduct the amount they have paid out themselves.
A subcontractor (Self Employed not CIS) working for an farm/industrial unit (limited company) had a minor accident over 5 years ago.
Interesting. I always believed that claims for personal injury compensation following an accident are subject to a 3 year limitation period.
There are a few cases in which it's longer than three years but, to point out the obvious, there's no time limit on out of court settlements.
There are a few cases in which it's longer than three years but, to point out the obvious, there's no time limit on out of court settlements.
But you wouldn’t settle out of court a claim that was out of time (well, I wouldn’t!). And, if you did, it might be more difficult to substantiate a claim for tax relief!
If there is a time limit, it's likely to be about notifying claim. It can take a long time to reach settlement, especially for larger sums.
If there is a time limit, it's likely to be about notifying claim. It can take a long time to reach settlement, especially for larger sums.
True. Odd one though - not a massive amount at the end of the day.
We still don’t know if it was covered by an insurance claim.
I need to know if I can include it in the profit and loss account.
On the basis of the details you have provided, I’d says probably yes.
OP
Have you looked behind the radiator in BJ's tax payer refurbished apartment?
I am sure that it is a treasure trove of a resource.
But to get there you will need a key, found in
HMRC Business manual .