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Loss relief was not available in an earlier period than claimed by the company

By Mark McLaughlin, June 2025

Discovery assessments were upheld, the cash basis of accounting was not available to the company, and a debt arising from the unpaid sales invoices should not be treated as an expense and deductible for tax purposes in an earlier accounting period than that recognised by HMRC. 

The appellant company issued a number of invoices in respect of supplies of services to a customer (IOL), amounting to £369,000. IOL did not pay the amounts owing. Following an investigation, HM Revenue and Customs (HMRC) issued a discovery assessment: (1) increasing the appellant’s revenue for the accounting period ended 30 September 2016 to include the sales invoiced to IOL; (2) disallowing claimed expenditure on consultancy services; and (3) allowing trading loss relief for the loss arising from the unpaid IOL amounts in the accounting period ended 31 March 2019. The appellant appealed. 

The First-tier Tribunal (FTT) held that there was a discovery that

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