Bad debts

This guidance note deals with bad debts for:

• •money and non-money debts for sole traders and partnerships not using the simplified cash basis, and
• •non-money debts only for company accounting periods beginning on or after 1 January 2005

For companies, money debts are dealt with under the loan relationship rules. See the Corporate debt ― overview guidance note. Debts which fall within either the derivative contracts or the intangible fixed assets regimes are also excluded from the rules covered in this guidance. See the Scope of intangibles regime guidance note.

The bad debt rules do not apply to the simplified cash basis as income is taxed on a receipts basis anyway. See the Simplified cash basis for small businesses guidance note.