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Small Property Bad Debts-PIM2072 Unreasonableness

PIM2072 - Deductions: Expense: bad and doubtful debts (Not cash basis)

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PIM2072 - Deductions

"The customer can only make a deduction where they have taken all reasonable steps to recover the debt."

Client has a rent bad debt of £45 and tenant has gone. I would reckon many landlords would just write off the £45 debt to avoid the hassle of lawyers. But then he does not get any bad debt write off for tax purposes.

There is no PIM2072 de minimus limit. I really want to claim the £45 bad debt though.

Any suggestions?


Replies (5)

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By zebaa
14th Jun 2021 18:38

To set on a lawyer for a debt of £45.00 would very likely cost more than the debt and that would be unreasonable, therefore the converse would seem to me to apply and that 'reasonable steps' have been taken to make a valid claim.

Thanks (2)
By The Dullard
14th Jun 2021 22:28

Suggestion: don't worry about it; in the unlikely event that HMRC do raise the issue just give in; the amount of tax at stake isn't worth the time.

Here. I'll indemnify your client*, subject to an excess of £20.

*Small print: does not apply to any HICBC liability, nor any amount of withdrawn Tax Credits, Universal Credit or other benefits.

Thanks (1)
By David Ex
14th Jun 2021 23:50

Agree “reasonable” is the absolutely key word. Tenants of private rented property can easily “disappear”. Even a £450 debt would likely not be cost effective to pursue.

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blue sheep
By Nigel Henshaw
15th Jun 2021 08:17

I dont understand your question - are you suggesting that your client has not taken reasonable steps to recover the amount? What do you think is a reasonable step to recover £45?
Just claim it

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By Duggimon
15th Jun 2021 09:47

"All reasonable steps" indicates to me a proportional response. For £45, "all reasonable steps" would be a single phone call or letter asking for payment. If your client has neither number nor address for the debtor, there are no reasonable steps.

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