Theft of income by an employee

I run a small retail business, and noticed recently that the cash takings and amounts banked did not reconcile with my monthly reports. It seems a staff member who has recently left my employment is responsible for the theft. What is the VAT and Tax postion in a situation like this where takings have been stolen?

1st March 2009

As you have actually made the sales, HM Revenue & Customs will insist on the relevant VAT being paid over for the VAT period in which the sales were actually made.

For tax purposes, as an employee was responsible for the theft, the amounts stolen will be an allowable deduction. However, if your business insurance covers theft and your insurers allow you to make a claim, then only the element which relates to the uninsured loss can be allowed against tax.

If you cannot make a claim, and do not receive an insurance payout for the loss incurred then the full amount will be allowed. As the police have filed a report on the matter, you should have received a crime number, which should be kept if HM Revenue & Customs query the loss in your accounts.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Call us today to make an appointment at your local office

0800 0523 555

Or submit an enquiry