Jennifer Adams considers whether tax relief is available when a debt goes wrong.
With ongoing economic pressure across a number of business sectors, bad debts are becoming an increasingly frequent problem for businesses taxed on an accrual basis (i.e., when invoiced), rather than on a cash basis (i.e., when payment is received). Such businesses include companies and unincorporated traders above the £150,000 turnover threshold.
Where debts are confirmed as irrecoverable, bad debt relief may be available for both direct tax and VAT purposes, but only if specific conditions are met. Relief is claimed as a deduction against income
