Tax relief on fraud

Tax relief on fraud

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A new client to me, bookkeeper fraud discovered by client and he has recouped the money lost, but, I have found @£8k going back to 2010 (which has been audited twice!) that I am practically certain is further misappropriated funds. Client does not want to spend time and effort proving or not and has instructed me to write it off.

I propose to have as a separate line in P&L and see no reason why this should be added back on the CT comp (no tax anyway as losses ) but as ACCA seem on a very long lunch wondered if anyone could give me any reasons why I would be wrong? I need this asap please.

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By User deleted
18th Dec 2012 14:28

If you're confident as to the background

I'd do as you suggest, showing it as 'employee theft' (assuming the bookkeeper was an employee - if not, other suitable wording). HMRC may well ask questions but seems to be that it should be allowable in full.

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By User deleted
18th Dec 2012 14:39

Many thanks

It is a debit that has been floating around for 3 years, started off as a payment on account to a supplier, ended up as an outstanding banking on the audited bank rec at the start of my year. During the year a couple of ficticious jounals were applied against it but I have written those back. Client has looked but can't find alleged original payment, the likelihood is BK took funds (may have been a combination of several smaller payments) and just shifted the debit around the accounts either deliberately trying to muddy the waters or just too inept to know what to do with it!

I will just caveat the client that HMRC may query, and possible request it is added back, a moot point really as going forwards I don't think tax will be payable so it is just affecting losses carried forwards that are unlikely to ever be relieved.

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David Winch
By David Winch
18th Dec 2012 18:02

4 years

If the convicted defendant was sentenced to 4 years I am guessing the theft was a chunky sum!

David

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Glenn Martin
By Glenn Martin
19th Dec 2012 00:31

@ David winch
It was about 120k I could prove over a 10 year period as she had destroyed a lot of records to cover her tracks so could of been more. She pleaded guilty on opening day of trial after claiming to be innocent all the way to that date. The theft was from a care home and some of it was residents money she had taken so they threw the book at her even with the guilty plea. The repayment order was for 70k which she paid form proceeds of the sale of her home so POCA does have its uses. She got 4 years but only served 6 months and was let out with a tag after that. Educating the Investigating officer from CID to the ins and outs of Sage and double entry booking was a challenge but he is now a sort of fraud specialist now. I have seen people go to jail for as little as £1000 for pinching from a till. So be warned don't pinch on my manor.

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David Winch
By David Winch
19th Dec 2012 01:12

@Glennzy

As you may gather from my website I make my living from crime (in a manner of speaking!).

David

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Glenn Martin
By Glenn Martin
19th Dec 2012 09:33

@David

I have had a look at your website very interesting stuff. I have been involved in 3 or 4 thefts over the years. If you ever need anybody in the North East to do some ticking and digging let me know. I have subscribed to your newsletter.

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