I am preparing accounts and tax return for a client who has been the victim of a confidence trickster during the course of a business transaction. They have incurred quite significant legal fees trying to get their money back which I understand to be claimable as a business expense, but is there any way they can get tax relief on the sum they have lost?
As the transaction has ocurred in the course of normal business, this is an allowable expense. The fact that your client received nothing for his money and trouble means that there is no income to set against this piece of business. That is the loss, which will in due course be set against all the other, hopefully profits of the period.
As you know, the legal fees are allowable but there is no compensation in the tax system for the aggravation, only the quantifiable loss.
Thank you for your help. My client is a letting agent who advanced a considerable amount of rent to a landlord before awaiting the funds of the tenant to clear. Unfortunately they didn't clear and the landlord refuses to return the rent paid by my client. Would this rent paid be claimable as a bad debt even though (with the exception of my clients commission) it does not show in the turnover?
A report from the offices of the inspector general for the Treasury Department found the IRS is losing a lot of money to tax return fraud, especially fraudulent returns submitted by identity thieves. The agency caught close to 1 million bogus returns filed by identity thieves in 2011, for the year 2010, amounting to about $6.5 billion in refunds. However, the report also estimates an additional 1.5 million fraudulent returns successfully resulted in refunds being disbursed for a loss of $5 billion. You can check more info << LINK TO AMERICAN PAYDAY LOAN COMPANY REMOVED FOR SECOND TIME BY MODERATOR >>
-- Edited by Shamus on Sunday 15th of December 2013 09:32:50 PM
And thats a Payday loan company isn't it..... And a colonial one at that.... Sorry, but trying to sell those things to accountants and bookkeepers is barking up the wrong tree.
Blind link removed from post
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I've re removed the link and this time banned the poster as well.
Serves me right for trying to skimp on a bit of paperwork by not deleting the poster in the first place... Tut, you give these people a second chance and what happens!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi,
I have a similar problem. Client was subject to a fraudulent e-mail where the suppliers account was 'hacked' and the bank details changed. It was a TT payment that was sent and the bank said it was too late to recall it. The payment is therefore gone! The client thinks the supplier in China may have had something to do with it and refused to send a further payment. The client is now out of pocket and nothing to show for it but didn't want to chance losing more money. How is this accounted for please?
Thanks in advance
