A retail client had £900 stolen with no prospect of recovery from insurer since the door was unlocked.
I think he still needs to treat it as VAT inclusive sales but has bad debt relief for income tax.
So:
Dr Bad debts £750
Cr Sales £750
Cr VAT creditor £150
Does the remaining debit for £150 go to bad debts too? I need to know this before I can book it in Xero.
Thanks
Replies (17)
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All of it goes to "Cash Stolen Due to Leaving Door Open £900".
No VAT reclaim. The supply was made. As you imply.
Has it been reported to the bobbies ?
I know there is no VAT reclaim, but does the other debit go to the P&L is my question?
What other debit ? There's only one debit for the whole £900.
I don't know whether it has been reported to the police, I just stuck to advising that the sales would have to go on the VAT return and I would figure it out on Xero, why do you ask?
Well, HMRC are likely to want some evidence that this theft happened and, short of a receipt from the thief, a crime number seems to be the best you can do.
Do you think I should ask for a copy of the incident report?
I've no strong feelings either way. Up to you.
BTW - why would you reduce the fee or not charge for services you provided??? We're all (i hope) to make the living out of the profession. If you were an employee at a high street retailer - Would you work for free in one of their shops because the warehouse burned down?
OK I will book the whole £900 to bad debts so that means they get relief for the VAT for income tax
It’s not a bad debt!
Well, the thief owes it him and isn't going to pay !!
It's a non-trade bad debt and there's no VAT relief.
If you're struggling for a title, I'd go for Uninsured Losses.
not sure, maybe it's bottle of prosecco already...
Shouldn't the entry be CR cash / funds in trf / etc and DR 'some code in the p&l' i.e. extraordinary items, etc.???
No adjustment to VAT as sales has taken place.
I would not certainly class this as bad debt, as no there is no debt. Unless someone is breaking the employment law and making the employee responsible.
Precisely, the choice of wording for the account name doesn't make a jot of difference. As suggested, set-up an account as 'Cash stolen'.
It is a case of which box in the tax return this £900 lands. I'd probably stick it in 'other expenses' in the absence of anything more appropriate.
Even if it was a ltd company, regardless of the account you post to in Xero, it is going to end up on one of the standard iXBRL accounts, depending on software used. This is my only annoyance with Taxfiler, as the choice of account headings is limited. For example, a client asked me why 'franchise fees' weren't down on the P&L and I had to explain they were within another more general account (choices are management fees or other costs). Anyway, I digress!
Write it off somewhere in the P&L and all will be dandy.