I have recently obtained a client (Limited company) but have been unable to request handover information. This is because they have a payment dispute with the old accountant that will be going on for a long time (long story but client is not in the wrong, accountant carried out unathorised work and then billed an extrotionate fee for it which client is unwilling to pay. I know this is true as the old accountant was my last employer from 2 years ago so I am happy to proceed with the client).
Accounts that I have previously taken over from this old accountant have been somewhat lacking in quality so their balance sheets can really be taken with a pinch of salt (missed HP's, missed fixed asset additions, loans not accounted for etc), which brings me to my issue. I have gone back over the last 4 years of bank transactions to try and make sense of the 'other creditors' and 'other debtors' brought foward in their last set of accounts. I have managed to make sense of the 'other creditors' section but I have a 'left over' other debtor balance of just under £30,000 from the brought forwards that I just cannot work out its reason for being there. It is a material balance as the Company turns over around £120,000pa.
I want to write this off as neither myself, nor the client, knows what this should be, but if I write it off through the P&L I assume it should be a write off with no tax relief - as I cannot vouch for what it was so could not classify it as a genuine expense?
Hope this all makes sense, any advice would be greatly appreciated. If you require any further information to assist me with this please just let me know.
Thanks in advance.