Outstanding debt

One of our clients has recently ceased business but there are some outstanding trade creditors that have remained unpaid for some considerable time.

If some of these debts are not pursued by creditors they would become statute barred and no longer payable.

At this point the client receives a benefit which I presume should be brought into account for tax purposes. But which tax?

Should it be treated as ‘other income’ at the time that the debt becomes statute barred or is there a case for treating it as a capital gain?

Furthermore must this be taken into account in the cessation accounts or can they remain as a debt with an ‘other income adjustment’ made on the tax return once it is certain that payment will not be made?

Presumably there is always the chance...