You should prepare an Affidavit of Loss explaining the valid reason for losing your books of accounts. You then have to notify the BIR as soon as possible. Depending upon the discretion of the BIR, you may receive a penalty for failing to preserve your books of accounts. The penalty amount is P1,000 but does not exceed P25,000 for the calendar year (SEC. 250 of the NIRC). To help you save time, here’s an Affidavit of Loss template you can download for free.