cash accounting scheme

For the purposes of the cash accounting scheme, you must be consistent in the method used.

The office holder is responsible for the cash accounting scheme adjustment described in paragraph 11.3.

(For more information on the cash accounting scheme see Public Notice 731).

Revised threshold for cash accounting scheme - paragraph 19.3.

Notice 731 Cash accounting gives information about the Cash accounting scheme.

You can start using the Cash Accounting Scheme:

This means that you cannot claim bad debt relief if you are on the Cash Accounting Scheme.

What is the Cash Accounting Scheme?

The cash accounting scheme allows eligible businesses to account for VAT on the basis of payments received and made.

If you are using the cash accounting scheme you can only deduct VAT once you have paid the bill.

If you use the cash accounting scheme, you must base your input VAT claim on payments made, not invoices received.

If the value of your taxable supplies, excluding VAT, is not more than £600,000 you may benefit from using the cash accounting scheme.

You can't use the Flat Rate Scheme with the Cash Accounting Scheme.

In contrast, using the Cash Accounting Scheme, you do not need to pay VAT until your customer has paid you.

Using the Cash Accounting Scheme, you do not pay the VAT if your customer never pays you.

You may leave the Cash Accounting Scheme voluntarily at the end of any VAT accounting period.

You may be able to use the Cash Accounting Scheme together with some of the following VAT schemes:

The turnover ceiling below which firms may join the Cash Accounting Scheme also rises by £50,000 to £350,000.

Therefore, if the invoice is paid in full, you will not need to convert any payment in euro into sterling for the purposes of the cash accounting scheme.

You can use the Cash Accounting Scheme if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million.

If you leave the Cash Accounting Scheme you will have to account for all outstanding VAT due including any bad debts.

You can use a retail scheme together with the Cash Accounting Scheme and/or the Annual Accounting Scheme.

HMRC may also withdraw your use of the Cash Accounting Scheme for a number of reasons, including:

Cash Accounting Scheme - this allows you to pay VAT only on the payments you receive from your customers, rather than the invoices you issue.

You must account for VAT in the tax period in which the tax point occurs at the rate in force at that time unless you use the cash accounting scheme.