Accrual Accounting Method
The accrual accounting method for VAT requires a business to account for VAT at the point an invoice is raised or received rather than when it is paid.
Typically all businesses with a taxable turnover exceeding GBP 1.35 million will be required to account for VAT in this way, with many smaller businesses opting to go instead on the cash accounting scheme. Businesses that operate on a tighter cashflow are not always able to stomach the prospect of paying VAT on invoices upon which they have yet to receive payment.
To discuss the viability of being on the cash based VAT scheme always speak to your accountant. --Latest--