Writing off an invoice

[tim123]

Just get your mate to send you 100k in invoices. Don't pay these, but claim to have been defrauded by your finance director who directed the funds. You should achieve most of your objectives this way. You increase your expenses - thus reducing your CT, and you probably also get a nice little holiday on the Isle of Wight as a free bonus

Na, it'll probably be a nice place near Bognor (Ford)

tim

[ASB]

Na, it'll probably be a nice place near Bognor (Ford)

tim

I seem to recall Heron International was partially run from there for a few months.

[edmolyneux]

Just a hypothetical question.

As I understand it. If you submit an invoice to a company and they refuse/fail to pay the invoice you can claim the invoice as a loss and it'll reduce your tax liability.

If, given my assumption is correct ( and I'm not an accountant so it may well be wrong). What's to stop me from writing an invoice to one of my friends companies and when they don't pay (nudge nudge), writing off the invoice as a loss and reducing my tax....

Sorry, I'm a bit bored at the moment and am thinking up some creative ways to get one over on Mr Darling...

Alas your tax liability is calculated from the invoices you send rather than the payments you receive. The date you submit that invoice is the date the liability arises. Nice try, though.

Here's a wrinkle - if you're on the VAT flat rate scheme you can reclaim bad debt relief at the standard rate, not your flat rate (see here). You might make a few quid there, but when the VAT inspector comes round, as he surely will, there'll me more than a few eyebrows raised...