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General provision for bad debts

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I had always thought that only specific provisions were allowable for corporation tax, not general provisions.

However I recall others such as Ruddles or Portia advising otherwise, please can anyone advise if a general provision is non deductible?

Accounts are prepared under FRS102 1A.



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By The Dullard
13th Feb 2020 11:50

There was never such thing as a general provision - not least because it isn't a provision (a liability of uncertain timing or amount - it's a complete misnomer . It's impairment of a financial asset (and the part of CFM41040 that suggests that they're different things is complete rubbish).

I think it was FRS 29(?) that once made the point that an impairment calculated in the manner that so-called bad debt provisions was the impairment of specific balances; it was just that at time of making the impairment it was not known which balances they were. This point is now lost somewehere between paras 11.24 and 11.25 of FRS 102.

In practice it is generally not worth arguing the toss with HMRC if they raise the issue though, as it is only a timing difference. That doesn't make them right. The starting place though is to dispense with archaic terminolgoy and call an impairment loss an impairment loss.

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By Matrix
03rd Mar 2020 19:21

Thanks both. Does anyone have any more thoughts on this please? I still don’t see what has changed with regards to general provisions. So I assume I add it back.

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