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I’ve done a question recently where I had to make adjustments to the profit and loss statement for taxation purposes (corporation tax)
The accounting period was year ended 31 March 2017.
The company wrote off an impairment loss of £1,600 relating to a trade debt. This was in respect of an invoice which had been due for payment on 10 November 2016.
I thought that this was less than 6 months from the due date and therefore was not allowable. I thought the debt needed to be six months old. I therefore added £1,600 back to the statement of profit and loss.
But in the answer they made no adjustment. Can you help me understand where my thinking is going wrong please?
Many thanks in advance.
PS. an amazing website and amazing lectures. Thank you very much indeed!
You are confusing the VAT rule for recovery of the output VAT on a bad debt with the adjustment of profit issue.