Bad debt - how to show?

Hi,
Would anyone by good enough to answer a question as simply as possible for somebody who is relatively new to Childminding accounts please?

I've changed the figures to make it easier!

If I invoiced £10,000 for 2015-2016 and received all £10,000 my understanding is that I should state my 'income' as £10,000.

If I invoiced £10,000 for 2015-2016 and received only £9,800 as a parent didn't pay £200 (that's another story!) what should I state my 'income' as?

I've read on here that I should record the unpaid £200 as an 'expense' for 'bad debt' but I'm still unsure about this and unsure as to what I should state as income!

Can anybody help please?

I would state my income as the figure you actually invoiced for but then also state that x amount was a bad debt. If I'm wrong I'm sure someone will be along to correct me. I leave all this to my accountant so not 100% sure.

I only put down as my income what I actually received as income. If someone didn't pay me then I didn't I get that income.

There's some information on bad debts here https://www.gov.uk/hmrc-internal-man...anual/bim42701 .

IIWY, I'd enquire with HMRC, as you'll need to understand what they class as a bad debt in the first place.

However.................

It would be far easier all round if you do your entire accounts and tax return on the 'cash basis'. In short, the cash basis means you account for all expenses at the point they are incurred and all earnings at the point where you receive the money. Never mind bad debts, it saves all the messing about with reconciling invoices against payments. See https://www.gov.uk/simpler-income-ta...basis/overview

Hopefully, this is your first year, so you can use cash basis from the start. Otherwise, get advice on how to switch to cash basis to keep things simple.

If you ever start earning over £83,000 you can probably afford an accountant to sort out the rest. :D

Invoices that haven't been paid I would give myself a 'credit' at the end of the tax year showing it as unpaid on the last day and then on the first date of the new tax year I re-invoice it into the year when it is going to be paid - I do this if a parent has paid for 4 weeks in advance but part of the payment covers work done in the new tax year - so I am only taxed on what I have been paid for that covers work in the relevant tax year. (I used to work in a garage as the accounts clerk and they would do this on all work that was charged to the garage from the service and parts department but hadn't been charged to the customer - so a 'Work in Progress' - we would do that every month!! Crazy eh!)

If that debt is going to be written off completely and never paid I would 'credit' it and then put it against the original invoice so it just cancels each other out.

I think that the main thing is that is absolutely clear what you have done and why if your accounts were ever investigated. (I'd love to know if childminders get investiagted? Has anyone ever heard of it happening?) If you are invoicing your customers then however you record their payments - ie your bank records / receipt book - it should tally with your invoices so you would be able to show you never received that payment.

Like Bunyip and loocyloo says its much easier just to record what you have actually been paid / received.