Oc tax write off debts query

[dexter35yrs]

hi all i recently read that when a debt is defaulted the OC claims through their insurance and is paid out - that debt is wrote off against tax - therefore the debt no longer exists !!! can anyone confirm !!

so if the debt no longer exists how then can dca vultures continue chasing the debt when it no longer exists?? is this not fraud??

 

Theories welcome.......

[twofoot]

It's a case that the OC loses on the bad debts so sells them off very very cheap. His losses are then offset against his tax bill. The debt still exists, sorry to bear bad news.

[the tinkerman]

Do not know if this helps but saved this on one of the threads I picked up on this site.

 

If they have wrote off the account and claimed VAT Tax relief, then they cannot sell the debt - the issue is proving they have claimed the tax relief.

 

In section 2.2 of the HMRC Reference: Notice 700/18 (December 2002) it states that a creditor who has met the condition of placing a debt in a “written off” account cannot sell the debt or assign the debt having claimed “bad debt relief”.

 

Tinks

[twofoot]

Wouldn't think they actually 'write it off'. They probably just sell it on at a loss.

[Christena]

Hello twofoot

 

By selling the debt off at a loss, they are effectively claiming back losses against corporation tax. and in doing so are writing the debt off.

 

Whatever DCA purchasing this debt has IMHO no right to demand a collection of the original amount owed as this has been reclaimed from taxation on profits.

 

Husband of Christena

[BRIGADIER2JCS]

It's an interesting proposition, but how can it be proved?

[Christena]

If you look at any profit & loss account for any business that has written off any bad debt you will find a heading called "Bad Debt write off" under business expenses.

 

This will not show you what particular debts have been written off but will be a total of what was written on in that fiscal year.

 

Husband of Christena

[BRIGADIER2JCS]

I wonder if in the case of banks and credit card companies if The Freedom of Information Act would be of any relevance?

[Christena]

Sorry, my knowledge is rather limited although am learning day by day!

 

I would add that any bad debt claimed has to be provenly exhausted by means of collection.

 

If a CCJ is recorded on this debt then this is sufficient enough to prove it is uncollectable by the OC.

 

Husband of Christena

[Dial Square]

This is very interesting. I made a full and final settlement over the phone in 2007 (a month before I found this site so stupidly trusted the OC). Hadn't heard a thing since (no SOA or DN) to inform me there was a balance remaining. Account disappeared from all 3 CRFs at the time. The alleged remaining balance has now been sold on to a DCA. I have no intention on paying it of course but the information could add to my argument.

[the tinkerman]

Suppose giving HMRC a ring couldn't do any harm as do not think they would be best pleased at a company that has claimed bad debt relief and then sold the debt on as well, but like Husband of Christena stated it would have been in bulk for the year rather than individual debts.

 

Maybe HMRC would not be able to divulge any info to you due to DP but might point you in the right direction I honestly do not know, but all I do know is if a company had claimed bad debt relief for a debt then sold it on then surely their has to be some accountability to someone and an audit trail somewhere..

[Christena]

HMRC would have no idea of what bad debts would have been claimed against profits.

 

HMRC, should they wish to know the individual details of the bulk figure would have to demand disclosure of this figure from the firm of accountants that produced the accounts.

 

Husband of Christena

[Dial Square]

I might do some investigation on this to see if there is some kind of letter I could send the OC asking if they obtained any tax relief on this alleged balance. Something similar to the letter asking a creditor under CPUTR 2008 if they hold a copy of the original agreement.

[count orlok]

Didn't the billions we as tax payers paid to the banks go towards paying for toxic debts? We certainly gave the banks billions for something and IMHO that has removed the moral compunction to go without food to pay back our debts.

[BRIGADIER2JCS]

HMRC should be able to quote law & regulation affecting this.

[Christena]

I wish I had a "Legal" mind.

 

How to prove that a debt which has been written off legally can still be enforceble as being recoverable by a DCA.

 

The phrase "The law is an ass" comes to mind.

 

Husband of Christena

[cerberusalert]

I wonder if in the case of banks and credit card companies if The Freedom of Information Act would be of any relevance?

Nope, that Act only covers pubic bodies & even then only in certain cases.

 

http://www.ico.gov.uk/for_organisations/freedom_of_information/application.aspx

 

http://en.wikipedia.org/wiki/Freedom_of_Information_Act_2000

[BRIGADIER2JCS]

Hi Cerbs don' we own most of the Bl**dy banks perhaps they are now public bodies or am I

into wishful thinking again?

[Christena]

Perhaps sometime in the future all banks that write off debt should be forced to enter details of write off's on a "Debit File" accessable to the public. This in turn could be used as factual evidence should one of the DCA piranahs come along - sorry to any fish reading this - not wanting to liken you to a DCA !

 

Don't think the banks would want do this however after some of the cock ups they have made.

 

Husband of Christena

[BRIGADIER2JCS]

Accountability maybe honesty NEVER:mad2:

[toymaker1]

I wish I had a "Legal" mind.

 

How to prove that a debt which has been written off legally can still be enforceble as being recoverable by a DCA.

 

The phrase "The law is an ass" comes to mind.

 

Husband of Christena

 

I am a bit puzzled about the apparent confusion surrounding this matter.

The way I see it is,if you have arrears, and then you get a the statement from the creditor which states "Closing balance £0.00" and "Minimum payment due (minimum payment plus arrears) £0.00", and then you get no more statements from that creditor, then as I see it, that debt has been written off, and that is an end to it.

What often happens is that 6 or 7 months later - after a clear 6 0r 7 month break with no contact from anyone- you get a letter from Cabot or another DCA sayiong that they have just bought your debt, then in that situation they have unfortunately bought a debt that does not exist anymore. - you were clearly told by the OC that you have no further payments due on that account. end of story.

[cerberusalert]

It has only been written off for tax purposes. They have to zero the a/c to balance their books. Double entry booking keeping et al.