A sole trader has had cash stolen from a safe on his business premises.The burglary took place with forced entry and has been reported to the police. He will not claim on his insurance as he had exceeded the cash limit allowed under the policy and does not want his premium to increase. Can he claim this loss in his accounts and get tax relief through the p&l.
Stephen Quay
Replies (6)
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A classic example
Stephen
This is a classic example of the ridiculous effects of the Proceeds of Crime Act 2002 (PoCA) and Money Laundering Regulations 2003 (MLR).
Under section 330 of PoCA you are obliged to report this to NCIS, since you know or suspect that some (unknown) person has had possession of the proceeds of a crime (the cash they stole) and this information came to you in the course of an activity in the 'regulated sector' (in this case accountancy work or tax advice).
Your report to NCIS will be utterly useless to the authorities since the police have already been informed of, and investigated, the theft.
The law will be changed when section 104 of the Serious Organised Crime and Police Act 2005 is brought into effect. This will amend section 330 of PoCA so that a report will no longer be required where you have no useful information concerning the identity of the alleged offender nor the whereabouts of the proceeds of the crime.
Some slight moves towards common sense in this legislation!
If you are an MLRO you can get confidential one-to-one email support, information and NewsAlerts from my website www.mlrosupport.co.uk.
David
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some good news
there should be no problem claiming bad debt relief (and obtaining income tax/corporation tax relief accordingly) particularly if Police involved.
please note however that VAT output tax is still payable to Customs & Excise.
Bad debt relief?
I may be thick but how can bad debt relief give relief where cash has been stolen? This is not a bad debt !
some good news (again)
Inland Revenue Business Manual BIM45851 confirms the availability of the deduction
Windup v Baiting
Unless I'm very much mistaken, this is a development of the judicial doctrine in Swallow v Hook, Line, & Sinker.