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Writing off stolen cash

How to enter on Xero

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

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19th Oct 2018 17:23

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 ?

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By Matrix
to lionofludesch
19th Oct 2018 17:47

I know there is no VAT reclaim, but does the other debit go to the P&L is my question?

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?

Do you think I should ask for a copy of the incident report?

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to Matrix
19th Oct 2018 17:57

Matrix wrote:

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.

Quote:

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.

Quote:

Do you think I should ask for a copy of the incident report?

I've no strong feelings either way. Up to you.

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By Matrix
to lionofludesch
19th Oct 2018 18:04

OK I will book the whole £900 to bad debts so that means they get relief for the VAT for income tax (needed to think it through to explain to client the cost).

Yes I will ask for the crime reference.

Thanks, the client seemed stressed enough already (and so I won't put up the payroll fees this month even though the staff turnover is really high and there is extra work for the pension, I expect this staff member won't be there much longer after this).

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to Matrix
19th Oct 2018 18:28

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?

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By Matrix
to ketteringUK
19th Oct 2018 18:56

I would not reduce the fee but I was joking that this was not the best time to advise that the turnover of staff is extra work for me. I have already suggested postponing staff for pension as many are lasting less than 3 months and will see how it goes.

Thanks (1)
to Matrix
19th Oct 2018 18:59

Matrix wrote:

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!

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By Matrix
to johngroganjga
19th Oct 2018 19:05

Well please can you advise what it is then?

I got this treatment from an old thread.

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to Matrix
19th Oct 2018 19:36

It’s not a bad debt

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to Glennzy
19th Oct 2018 22:24

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.

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19th Oct 2018 18:29

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.

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By Matrix
to ketteringUK
19th Oct 2018 18:52

Thanks but which code in the P&L?

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to Matrix
19th Oct 2018 18:58

Can’t you create a new P&L code “Cash Stolen”?

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By Matrix
to paulhammett
19th Oct 2018 19:23

It is an unincorporated business so as long as I can write it off then I don't think it really matters actually.

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to Matrix
20th Oct 2018 13:16

Matrix wrote:

Thanks but which code in the P&L?

Why does everyone ask for a code ?

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By Matrix
to lionofludesch
20th Oct 2018 13:45

I only started asking for a code when responders were saying it wasn't a bad debt and I should create a P&L code but no one has said don't write it off, book to drawings instead, so that is all I needed to know.

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20th Oct 2018 13:08

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.

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