BIM40210 - Specific receipts: unclaimed balances: vital to establish all of the facts

Understand the nature and conduct of the business and review all documentation

You need to come to a detailed understanding of the trade carried on and the circumstances that have given rise to unclaimed balances. In some trades the occurrence of unclaimed balances is an everyday event, in others they may be extremely rare. As a bare minimum you should obtain and review:

• the terms and conditions of transaction
• establish the precise relationship between the parties at the time the disputed sums arose (including obtaining sight of relevant contracts, correspondence, file notes and other pertinent documentation)

From reviewing the evidence you need to be able to establish:

• the circumstances giving rise to the creation of unclaimed balances and to their treatment in the accounts
• the frequency with which such balances arise
• the steps the taxpayer has taken to alert the other party to the transaction that an unclaimed balance has arisen and continues to exist
• the correct accountancy treatment at all stages

The points bulleted above do not comprise an exhaustive list for all circumstances.

Health warning

This page is part of the section of the Business Income Manual on unclaimed balances. You should read the whole section to understand this topic. See the contents page at BIM40200.