SallyB

I rent properties and prepare accounts on the traditional (Not cash) basis. I have used an estate agent to collect some of the rents. The tenants have paid the rents to the agent but he has not paid them over to me and has now been arrested and charged with theft etc. I have been told : 1) that as the tenants have paid the rent I have to include it as income in my accounts as if it had been paid to me. 2) The amount stolen by the agent does not count as a bad debt (as it is not a bad debt from a tenant) even though there is no chance of recovering the money. I therefore have to pay tax on the rent that was stolen and not received by me, which does not seem fair. Is this correct ??