*For anyone who has a self-assessment tax return due. Remember that the final deadline for both on-line filing of your return and payment of your 2006-07 tax liability is 31 January 2008. You may also have a payment on account to make by the same date. There is an automatic fixed penalty of £100 for [read more]
Bad Debts subsquently repaid*Occaisonally, a bad debt that has been written off may be paid. If the payment occurs in a later period than the write-off, the amount paid should be recorded (in the period that payment is received) as additional income in the profit and loss account. * |
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Reclaiming the VAT on bad debts written off*If a bad debt has been written off by a VAT registered business, the VAT on the original sale can be reclaimed. The debt must be older than six months and less than three years and six months. You include the VAT on the bad debt in input VAT (box 4) of your VAT return. [read more] |
Writing off Bad Debts*Once a business decides that a debt is bad, a write-off is required. The effect of such a write off is that the value of the debtor (as a current asset) falls by the amount that is being written off and the profit also falls by the same amount. * |
What is a Bad Debt*A bad debt is a debt that is unpaid possibly because the customer has gone bankrupt or more often simply because the customer refuses to pay for some reason. Whatever the reason, a business may decide that a particular debt is unlikely to ever be paid and thus declare that debt “bad”. * |
