Old rules: loan relationships: authorised accounting methods: accruals basis: authorised arrangements for bad debt
Authorised arrangements for bad debt
This guidance applies to periods of account beginning before 1 January 2005
A creditor company following an authorised accruals method must assume that all amounts will be received in full and on time. But, under FA96/S85(3)(d), it must also ensure that it makes the proper adjustments as required by the authorised arrangements for bad debt.
These authorised arrangements are found in FA96/SCH9/PARA5, and they allow a departure from the assumption that all amounts will be received in full.
These arrangements do not apply to connected persons - see CFM81100+.