New client (partnership) has came to us after many years with old accountant.
the partnership is in the business of lending money on short term loans and making commissions on cashing cheques...you know the type.
Anyway. the client has been reporting £250k business profits every year for a while now.
When we review the debtor book and discuss this with client it is clear that significant debts need to be written off. We have indentified £800k of debts that relate back to many years ago! (bank debt increasing should have been a clue you would have thought).
The accounts for the current year show a loss of £700k!
I beleive that the previous agent was negligible and there may or may not be a report to governing body and / or a PII claim instigated, however I dont wish to get into that just now.
My question is what can we do about this loss?
Does this fit in with the new "overpayment relief" (formerly error or mistake)? Is this a change of accounting policy? Is this a current year write off subject to normal carry back 12 months and carry forward rules?