Unpaid invoices as a tax deduction

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Hi All

Does anyone claim unpaid invoices as a tax deduction for their practice?

I work as a sole trader in a low socioeconomic area where non-attendances and patients not paying bills are all to common. Claiming unpaid invoices or drawing up an invoice for non-attendance would be a great way to relieve some of the financial burden this places on my business.

An accountant friend of mine suggested that these could be classified as trade debtors and could be used as a tax deduction.

My concern that in the case of non-attendance this may not be possible as the service has not been rendered.

Any experience or advice in this area would be of great help. (i understand that this is not professional tax advice)

Steve

 

Hello Steve5572,
Firstly, I think the best person to discuss this with is your accountant.

However, from what you have said I think that they could only be classed as "trade debtors" if you have already started proceedings against them for non-payment. otherwise the Inland Revenue will have no proof that these debts actually exist.

Personally, I think that you would be better advised to be proactive and tighten up your credit control rather than deal with debts when they occur. make it clear that non-attendence may result in a fee being charged and take deposits from repeat offenders before booking them in.

Being in a low socioeconomic area is not an excuse for non-payment. Clients can always find money for cigarettes, booze, nail extensions, hair extensions etc etc IMO

regards

Catfoot

 

Steve bearing in mind tax laws vary depending on where you live, if patients owe you money they are an asset on your balance sheet as a trade debtor. If they are a bad debt, that is there is a very good chance you will not be able to collect the money, you can usually write this off as a loss as "bad debts written off" which will reduce the tax you pay. As catfoot says, speak to a good accountant

 

Payment on completion is my normal practice. A nursing home visited on a 6 week cycle settles in full on submission of an itemised fee account on the 20th of the month. Work done on behalf of the Irish public health service is sometimes erratic but generally within 30 days of submission of a monthly account. I do not take cards as yet as in my practice there is still a preference for cheque settlement among older patients but this is likely to change as the patient profile rolls over. I have an accountant who takes care of all my tax matters - the Irish tax code is so complex as to be beyond my capacity to handle; the accountant more than justifies his annual fee, and there is the added bonus of a good night's rest from peace of mind with a professional dealing with all taxation issues. Each to their own system, however.

 

My Accountant encouraged me to do this. Yes.