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Sam, Accountant
Category: Tax
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A partner in a farming business responded to a hoax call

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A partner in a farming business responded to a hoax call which he believed was from his bank advising him that the business bank account had been compromised. He transferred £40,000 into what turned out to be a bogus account and the money has been lost. The matter is being handled by ActionFraud (Police) but nothing has been recovered. Can this amount be treated as an allowable tax deduction in computing the farms trading profits? Thanks David XXX

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.
This is an interesting point and IF allowable would fall under the claim of irrecoverable debts written off. However this does not fall within the remit of an amount deemed owed to the business which has failed to be paid.
Also I think it very much a case of not having been an expense incurred by trading, but by the mistake made by the individual who actioned this matter.
I feel sure that HMRC will refuse to allow this as an expense BUT in view of the amount, and the fact you have nothing to lose, I would write to HMRC c/o The Technical Team ( mark both the letter and the envelope c/o this team) and ask them for their decision on this matter, so you are covered by HMRC agreement if this amount is claimed.
I am sorry this is not a more definitive answer, but this is not covered in any of the HMRC business income manuals and this never arose during my 26 years working for HMRC.
Do feel free to ask any follow up questions
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