Unclaimed Creditors

Our company have some advance from a customer for payment to third parties on behalf of the client for custom clearance job.

Later on cost of third party payment got reduced sustancially and part of advance remained with us. The client had

told us to retain the advance for next job. The advance is shown in final accounts in clients name.

Later on advanced company merged with some other company and later on it merged again with some other company.

Now 3  years passed; no company came forward to claim the amount. How long we should carry forward advanced amount in our books ? 

if right claiment approches, our company intends to refund the advance if not claimed can the company write off the amount ?

 If yes how the entries should be passed in books of accounts ?  Advance was for third party payment (reimbursedments) hence not against service bill.

But now if written off; will there be service tax liability ? If yes then from which date ?

Kindly advice; thank you so much.

Valerian D'souza

Accounts Manager

Replies (1)

In the above question the creditor will be treated a unsecured creditor and shown in the Balance Sheet as unsecured Loan in case of Merger creditor can give their consent or force the company to secure his debt.

Unsecured loan can be shown in the Balance sheet for several years there is no objection according to me.

It can be write off only when the money returned to the creditor or the company disolved.

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