Written off debt on balance sheet

[singlemalt]

If a creditor writes off a debt, is it removed from the debtor's balance sheet?

and would it then be treated as revenue for tax purposes?

 

[UK Contractor Accountant]

Distinction between trade and non-trade loan relationships​

All profits or losses (including exchange gains and losses) arising from loan relationship are taxed or relieved as income, as follows:

where the loan relationship arises in the course of a company’s trade, in the computation of trading income; or otherwise as non-trading credits or debits.

Loan relationship debits and credits​

For each accounting period, a calculation is made of the:
(a) credits from loan relationships
(b) debits from those sources.
If (a) exceeds (b), the excess is a loan relationship credit and charged to corporation tax. If (b) exceeds (a), the excess is called a loan relationship deficit and will be available to relieve against other profits. The precise tax treatment depends on whether it is a trade or non-trade loan relationship.

​

 

[NicoJ]

If a creditor writes off a debt, is it removed from the debtor's balance sheet?

and would it then be treated as revenue for tax purposes?

If the write off is agreed on both sides then yes the debtor would also write the transaction off. If not, then not necessarily.

Yes, if it is a trade creditor it will be reversed against the original cost. It may not be taxable depending on the relationship between the parties and the nature of the transaction.