Suffering from a bad debt is not good for any business. However you can obtain tax relief for this. If a debtor is not going to pay, and either the cost of pursuing it is un-economic, or the chance of recovery is remote, then the debt can be written off in your accounts and this can be treated as a deductible cost in determining your level of profits for tax purposes. If the debt is subsequently paid in a later accounting period, then the amount recovered is treated as income.
Any costs of pursuing a bad or slow paying debtor can also be treated as a tax-deductible cost. This includes legal fees and other debt collection costs.
If you have any problems with debtors please feel free to discuss the situation with us.