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Review your debtors now.

If you think you’re not going to be paid, write off the amount. Don’t delay beyond balance date, because you can’t backdate a write-off.

Show evidence to confirm when you wrote off the bad debt. For example, if you type out your bills and keep copies as your record of what is owed to you, write on your copy something like “written off as a bad debt on . . . . . (write in the date)”. Initial the note, too.

Inland Revenue requires you to do everything reasonably possible to collect the money before you deem it a bad debt.

Once you have written off a debt as bad, you don’t have to stop trying to get the money. Sometimes you are lucky and get paid even though you had good reason to believe it wouldn’t happen. That is a “bad debt recovered” and becomes income when you receive the money.