This may be a really simple question but its the 1st time I’ve come across it.
I’ve recently invoiced a client for work I’ve already completed. The client has since stopped trading and is refusing to pay the invoice.
The invoice is only for £11.25 so not really worth spending any more time chasing up.
How do I go about recording a “none payment” in QF?
INVOICE OUTSTANDING FOR 6 MONTHS OR MORE:
The posting below may help:
The process of writing off Bad Debt is automated in Quick File, to which end, a ‘Bad Debt’ control button appears on the invoice, once it becomes older than 6 months:
UNDER 6 MONTHS:
If the invoice has been outstanding for under 6 months, you could wait for the invoice to be unpaid for 6 months or more and then follow the ‘Bad Debt’ process, alternatively you could
raise a credit note if you wanted to clear the debtor balance now.
I have applied a credit note to the invoice however it did not allocate it to a “bad debt” account. Is this normal?
I didn’t seem to see the same screens as the ones in the KB.
You can only write down an invoice as bad debt after 6 months, only then will the “Bad debt” button appear.
What effect does this have on a self assessment tax form? Is it better to wait for the bad debt?
Anyone have an answer to Steve_Allen’s question about tax returns?
It doesn’t really make any difference. If you raise a credit note, it reduces income. If you wait for the bad debt, it adds to costs. The net effect for tax is the same. The choice is yours as to how to treat it.
I think Steve Allen’s question related to what affect does it have on a self assessment form prior to making it a bad debt.
The answer is depending on how you record your income on your self assessment.
If you use the cash basis for tax, then it has no affect. Since you only record payments received. Whether you marked it as a bad debt or whether it remained unpaid, it’s the same thing.
If however you don’t use the cash basis, then it’s recorded as turnover regardless of payment, until its recorded as a bad debt, and only then would you record it as a cost.
If the bad debt was created in the following tax year then you will see a reduction in tax in that year. As opposed to the year in which it became due.
Unless you raise a credit note, which he did, in which case it reduces turnover.