THE CASH ACCOUNTING SCHEME

VAT Weekly Top Tips with Louis Good – Week 2 The Cash Accounting Scheme allows you to account for VAT based on when you receive payment from your client, rather than when you issue a sales invoice. Similarly, you can reclaim VAT on your purchases when you make the payment, rather than on the invoice […]

November 28, 2024

VAT Weekly Top Tips with Louis Good – Week 2

The Cash Accounting Scheme allows you to account for VAT based on when you receive payment from your client, rather than when you issue a sales invoice. Similarly, you can reclaim VAT on your purchases when you make the payment, rather than on the invoice date. 

This scheme is available to businesses that expect their taxable turnover (excluding VAT) to remain under £1,350,000 in the next year. 

Pros:  

  • Automatic bad debt relief is included, making it advantageous for businesses that offer extended payment terms to customers. 

Cons:   

  • It may not be suitable if your business is in a repayment position (i.e., regularly receiving VAT refunds from HMRC). 
  • It is less beneficial if sales are paid promptly or in cash. 
  • It may also be disadvantageous if you have extended credit terms with suppliers, as you might prefer to recover VAT based on the invoice date. 

If you are considering this scheme and want to explore your options, please contact Deeks VAT Consultancy for specialist advice.

Louis Good

VAT Specialist 

louis@deeksvat.co.uk

Share this page