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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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And I have a loss this tax year due to unpaid invoices.

Customer Question

Hi and I have a loss this tax year due to unpaid invoices. After calculations I have a gross income of £6000. My allowance is £10883.03. Does this mean I rebate of £4806.04
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.I'm assuming that you are a sole trader. Take a look here for information on bad debt relief. In order not to have the bad debts you claim disallowed by HMRC, you must have made all reasonable efforts to get paid and have evidence to prove it if you are asked for it by HMRC. Bad Debts don't reduce your tax liability pound for pound. They reduce your income on which you pay income tax. If your profit is £6,000 and that is your entire income for the year, then you won't have any tax to pay. If you made payments on account of your tax liability based on the previous tax year's income, then you will be able to reclaim the tax paid. I hope this helps but let me know if you have any further questions.