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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Specific receipts: unclaimed balances: introduction and scope of subject


The term ‘unclaimed balances’ includes sums derived from a trader’s customers described as ‘unclaimed balances’, ‘overpayments’, ‘windfalls’, ‘voluntary payments’, ‘double payments’, ‘payments by mistake’, ‘sums written back’, etc. Such sums also arise if a supplier fails to ask a trader for money properly due, or asks for less than is properly due or refunds money in error.

The correct tax treatment depends on the nature and extent of the trade and the circumstances of receipt or payment. Broadly speaking, unclaimed balances, which are not on capital account, are part of the trading or property income for the year in which they are recognised as such in business accounts. These unclaimed balances are taxable in the year in which they are recognised.

A provision for a future liability that satisfies the criteria in BIM46510 is an allowable deduction for tax purposes. To the extent that the provision is not required it will be written back to profit and loss and is taxable when written back. The write back of the whole or part of a provision that is no longer required is not an example of ‘unclaimed balances’.

Health warning

This page is part of the section of the Business Income Manual on unclaimed balances. You should read the whole section to understand this topic. See the contents page at BIM40200.