Cash accounting scheme ― eligibility, joining and leaving the scheme

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of the main principles concerning the cash accounting scheme. This note should be read in conjunction with the Operating the cash accounting scheme guidance note.

What is cash accounting?

The cash accounting scheme is an optional method of VAT accounting whereby VAT is recorded on the basis of payments made and received. This differs from the normal rules where businesses use invoices as the basis for paying VAT to and recovering VAT from HMRC.

Using cash accounting can be beneficial to a business in terms of cash flow as it will not be required to pay VAT to HMRC on sales until the customer has actually paid for the goods / services supplied. Using the scheme will be most beneficial for businesses that offer customers extended payment terms or suffer significant bad debts. The scheme is aimed at smaller businesses and there are turnover limits that determine if a business is eligible to choose to use the scheme.

The scheme will not benefit

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Owner-Managed Businesses

SEIS and EIS ― overview

SEIS and EIS ― overviewThe seed enterprise investment scheme (SEIS) and enterprise investment scheme (EIS) are very similar schemes which offer substantial tax incentives to investors in companies which qualify. The tax incentives for SEIS and EIS investments are intended to encourage investment in

14 Jul 2020 13:31 | Produced by Tolley Read more

Personal Tax

Maintenance payments

Maintenance paymentsMaintenance payments are payments made by a taxpayer to their former or separated spouse / civil partner for the maintenance of that person or their children. To obtain any tax relief for maintenance payments, one of the couple must have been born before 5 April 1935 and the

14 Jul 2020 12:12 | Produced by Tolley Read more

Employment Tax

Parking provision and expenses

Parking provision and expensesCar parking facilities at or near to the employee’s workplaceThere is an exemption from tax and NIC where an employer provides parking, or pays for or reimburses an employee for the costs associated with car parking at or near the place of work; there are no reporting

14 Jul 2020 11:09 | Produced by Tolley Read more

UU��ֱ��