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HMRC internal manual

Business Income Manual

Specific receipts: unclaimed balances: trade debts that are never paid

Where a trader has supplied goods and services, the customer is liable to pay even if no invoice has been issued. The customer who has not received an invoice may recognise an exceptional profit, perhaps at the end of the six-year limitation period for enforcement or at an earlier time if they believe there is no longer a likely prospect that they will have to pay. For further discussion of the Statute of Limitations, see BIM40230.

See BIM40260 for an example. Modern accountancy practice requires the debt to be written back to profit and loss and that the correct computation of profits should include the trade write back, so it forms part of the profits chargeable to tax (see BIM40265).

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.