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The tax liability on payments made for services that are not provided
Our client is a limited company engaged in the specialist scientific testing of samples. About three years ago it was awarded a contract to test samples over a five-year period. The contract was for about £800 000 and assumed that a minimum number of samples would be provided for testing.
The client received £250 000 of this amount at the outset to enable it to buy the expensive specialist equipment required to complete the work followed by quarterly instalments of £50 000.
In the first two years our client took credit for the samples provided although these were at a far lower level than originally anticipated and the balance of the contract value was carried forward as deferred income.
It now transpires that the contract is to be terminated because no more sampling will be required. Provision is made in the contract for all payments to...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
