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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Specific deductions: bad & doubtful debts: recovered after allowance

The following guidance does not apply to bad money debts of companies which are dealt with under the loan relationship rules. See BIM42701.

Where a deduction for a bad or doubtful debt has been made and the taxpayer subsequently recovers the debt or an amount in excess of its written-down value, the amount recovered or the excess should be brought into credit in the year of recovery (see Bristow v William Dickinson & Co Ltd [1946] 27TC157).

As regards the treatment of debts recovered after the discontinuance of a business, see BIM42745.