BIM40255 - Receipts: unclaimed balances: trade debts that are never paid

Where a trader has supplied goods and services, the customer is liable to pay even if no invoice has been issued. The trader who has not received an invoice may recognise an exceptional profit, perhaps at the end of the 6 year Limitation Act period for enforcement or at an earlier time if they believe there is no longer a likely prospect that they will have to pay.

Modern accountancy practice requires the debt to be written back to profit and loss and that the correct computation of profits should include the trade write back. For accounting periods starting on or before 31 December 2001 we took a different view, see BIM40265.

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This page is part of the section of the Business Income Manual on unclaimed balances. You should read the whole section to understand this topic: see the contents page at BIM40200.