Is It Time to Recover Those Historical Debts?
Most successful businesses will have to deal with write offs at some point and for some it can be a regular problem in every financial year.
Write offs happen when a business simply writes off unpaid invoices because pursuing payments is seen as not being worth the effort or it will end up costing more than the debt itself to continue to pursue the debtor.
This is the negative side of write offs but there are some positives. You can get tax relief on those write offs which is one and then there is the other positive – you can actually pick up the trail again even if you have written off the debt in your annual accounts.
You have as long as six years in fact to recover historical debts and it doesn’t matter which tax year the debt is or was in.
If you do manage to recover the money within this 6 year period, of course you would also need to pay the tax on it, but that is only a percentage of the overall cash you are gaining, which may not have come your way in the first place.
So why not revisit those historical debts and take steps to recover them to receive a potential windfall.