Cash accounting VAT scheme

With the cash accounting VAT scheme you account for and pay VAT to Revenue & Customs only when your customer pays you. This will normally be a great help for cash-flow and means VAT on bad debts is never paid to HMR&C
However, you cannot reclaim VAT on purchases until you pay your supplier. This can be a disadvantage if you buy most of your goods and services on credit.
The cash accounting scheme can be used for businesses with turnover (excluding VAT) of up to £1.35m and once you start to use cash accounting you can continue to do so until your VAT taxable turnover reaches £1.6m.
You do not need to fill in an application form or notify HMR&C to start using the cash accounting scheme and you can start using the scheme at the start of any VAT period (if already VAT registered) or from the first day of registration. However, if you start using the cash scheme after using the standard VAT accounting scheme, you must take care not to account for VAT twice on any sales or purchases.


For further details go to http://www.hmrc.gov.uk/vat/start/schemes/cash.htm
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VAT Schemes Explained :
>Cash Accounting VAT Scheme
•Retail VAT Schemes
•Flat-rate VAT Scheme
•VAT Margin Scheme for Second-Hand Goods

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