Could someone please clarify for me how to deal with invoices never paid and never will be on SA Tax return.
For a sole trader is it acceptable to adjust the total of business income, seen as the monies were never received? Or do they have to be included and then counted as an expense?
If it has been done incorrectly for a previous year will it need to be included as income and expense on next return?
Hope I haven't confused things with all these questions!
Bad debt is an expense on the P&L and cannot be claimed unless the debt is over 6 months old.
Take the bad debt and reduce the Debtors and put the total as a cost on the P&L. You do not say of the client is VAT registered, as this can complicate things as you add the figures onto the inputs not deduct form the outputs.
Sorry still not sure what to do. Please be patient with me!
On last years tax return the bad debt was taken off the total business income figure, I now feel that this was a mistake as I realise total business income includes money earned by the business(not just monies received) up to 5th April, even if you haven't received payment.
So do I need to make an adjustment on this years figures, for my client to reflect this money not declared as earnings last year. If so how do I make the adjustment keeping in mind the monies were never received? Obviously now the bad debt is over a year old. My client is not registered for VAT.
I want to make sure my figures are all correct for my client. Thanks
