BIM40215 - Specific receipts: unclaimed balances: legal background - the basics

Points to consider

It is important to establish whether the payment relates to a trading transaction when paid. The payment may be made incorrectly in some respect, so that the trader may have a liability to repay some or all of the amount. This influences the timing of recognition of the receipt in the accounts (see BIM40205), but not whether the amount has the character of a trading receipt when received. Questions to consider include:

• when the payment was received was there an ongoing trading relationship with the customer? Did the trader provide goods or services and was the payment meant to be in recompense for goods or services given or to be given?
• was the payment meant for use in the trade (whether or not there was a trading relationship and/or consideration for the payment)?
• was there a non-trading reason for the payment?
• what is the other party to the transaction’s explanation for any discrepancy between the sum invoiced and the amount paid?

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.