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The tax treatment of debits and credits for uncompleted car sales and purchases
I have a new client in the motor trade whose previous accountant left various unresolved balances.
There are debits of sales made and recorded in the accounts and stock books but not completely paid for and there are credits for deposits and payments received on account of sales to be made that appear not to have been completed.
There are also credit balances for vehicles bought but seemingly not paid for. Some of these balances go back seven or eight years.
Putting some numbers on the amounts involved the debits are exceeded by the credits by around £130 000. Historically the business turnover has been about £700 000 annually. The previous accountant and the client are stymied as to how this occurred and I am wondering how best to resolve this matter.
It seems tempting to write off the debits against the credits and to treat...
