Tax relief on lost income due to agency liquidation?

Nikilala

Hi
I am hoping someone here can give me some advice.

I am self-employed and in the last tax year did some contractual work through an agency. Unfortunately the agency went into liquidation half way through, and I received neither pay nor dividend for one month of full time contractual work as contractors are at the bottom of the creditors list.

I wonder if there was any way to get some sort of tax relief - I understand as I didn't receive this income, I don't need to declare it in the tax return. I can't declare it as a "loss" as it isn't a loss as defined by HMRC, of course it's not an expense either, but as I am selling my time and services rather than a product it is a loss to me - I have essentially lost one month where I could have worked and got paid elsewhere...

If anyone has any advice or experience in a similar scenario, I'd love to hear it!

anamenottaken

As a self-employed person, what were your quantifiable expenses in carrying out the work? Did you travel to a site, for instance?

Nikilala

anamenottaken wrote: »

As a self-employed person, what were your quantifiable expenses in carrying out the work? Did you travel to a site, for instance?

Yes I did travel to site, and am claiming this as an expense.

Cook_County

Sounds like a bad debt to me in your accounts.

TheCyclingProgrammer

"self-employed", "dividends"...somethings not making sense.

Did you issue an invoice that is effectively unpaid?

PasturesNew

The short answer is no. That's part of the definition of being self-employed: to suffer losses if they occur. You did work, you weren't paid. End of. Expenses incurred can be claimed, but there's nothing for "Tax Relief Extra because I could have done work for somebody else that month and been paid"

TheCyclingProgrammer

PasturesNew wrote: »

The short answer is no. That's part of the definition of being self-employed: to suffer losses if they occur. You did work, you weren't paid. End of.

Doesn't it depend on whether OP is using cash or accrual based accounting? If the former then I guess if you aren't paid, there's nothing to be taxed, but if the latter, then an issued invoice means they have taxable turnover that they haven't been paid for - they should be able to get tax relief for the bad debt.

Savvy_Sue

If a normal employer goes bust then something can be claimed back for missing wages: does this apply to this situation?

CKhalvashi

TheCyclingProgrammer wrote: »

Doesn't it depend on whether OP is using cash or accrual based accounting? If the former then I guess if you aren't paid, there's nothing to be taxed, but if the latter, then an issued invoice means they have taxable turnover that they haven't been paid for - they should be able to get tax relief for the bad debt.

The idea in the tax system will be to put the OP back in the position that they would be had they not done the work.

On the liquidation, they will be an unsecured creditor, so will only be taxed on what they actually receive.

Nikilala

TheCyclingProgrammer wrote: »

"self-employed", "dividends"...somethings not making sense.

Did you issue an invoice that is effectively unpaid?

Yes the agency had a "self-invoicing" system which meant I put my hours into their time sheet and they generated the invoice for me. And yes that invoice never got paid as they went bust before its due date.

Nikilala

TheCyclingProgrammer wrote: »

"self-employed", "dividends"...somethings not making sense.

Did you issue an invoice that is effectively unpaid?

Yes the agency had a "self-invoicing" system which meant I put my hours into their time sheet and they generated the invoice for me. And yes that invoice never got paid as they went bust before its due date.

The solicitors who wrapped it all up later told me that due to insufficient funds no dividend will be paid to the unsecured creditors (such as myself).