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M Michiels (TC4357)
The taxpayer ran a care agency providing carers for families with dependent children who had mental or physical disabilities.
Two clients failed to pay for services during 2010/11. The taxpayer included the unpaid amounts a total of £6 713 in box 26 headed “irrecoverable debts written off” of his 2010/11 tax return. He set off the figure against his profits for the year.
HMRC did not accept that the sum was a bad debt and amended the assessment.
The taxpayer appealed. He produced evidence to show that £438.38 was irrecoverable from the first client. The two parties agreed the sum constituted a bad debt.
The tribunal found that the second client made payments over time but a lack of list of the amounts due and settled made it impossible to find which debts remained unpaid.
The judge concluded “on balance” that the outstanding sums...
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