Hi my client has closed his business, his income is well above the rates for PC however he had bad debts which have been written off as having no chance of being recouped. However, when he claimed PC he was told bad debts can't be added to expenses side of calc and thus his income is too high.

Is this right?

Also if the income from the year 2006-7 is deemed as above, does it carry on to the year 2007-8 etc.

I'm relying on my VERY OLD knowledge as a DSS Decision Maker here so stand to be corrected.

If he has ceased trading then he should have no income from self-employment to be taken into account.

Accounts from earlier years should only be used to calculate self-employed earnings where they are representative of the current trading pattern.

The bad debts may have some value (called a chose in action, I think) as the right to recover the money could be bought by someone else. Any value would be a capital asset.

Hope this helps.

Thanks Martin. I told client to reclaim PC as he was turned down in Feb and we are still waiting for the reasons in writing. However he had a visit from Pension Service at weekend to do fresh claim and he was refused. Gave above reasons and wouldn't let him make fresh claim. I've already asked for recon on first failed claim and am furious he's been told he can't make fresh claim. Watch this space for an update, i'm waiting to speak to specialist on this one..

Surely there is ALWAYS a right to make a claim for benefit (see Reg 4 of the Claims and Payments Regulations). It is then for a decison-maker to decide on entitlement.

The only people that can stop a person making a claim are the judiciary or Parliament.

Mon 19-May-08 12:34 PM by Gareth Morgan

Back to the beginning; if his business has closed, where is his income coming from? If the income is higher than the PC rates why should he be entitled?

Bad debts would typically be negative capital not negative income anyway.