Bad debts - mitigating the pain
No-one likes losing money but in today’s economy bad debts are a common issue. We can’t help you recover your money but we can help you make sure you don’t pay tax on money you don’t have.
UK tax legislation provides relief for normal trade debts to the extent that they are, or there is a reasonable expectation that they will become, irrecoverable. One keyword is normal - for debts to associated companies (i.e. under common ownership) you need to show you have operated on normal trade terms. If not, relief may be denied.
Bad debts within a group are different again and I will cover this in a future blog.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author.
Date: 10th August, 2009
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