VAT Cash Accounting generally links VAT to payments received and made rather than simply to invoices. This can help where customers take time to pay, because sales VAT is not normally due before receipt.
The other side is that purchase VAT normally cannot be recovered until suppliers have been paid.
Check eligibility
Turnover and compliance conditions apply, and some transactions must be dealt with outside the scheme.
Use the current eligibility guidance for joining and leaving limits. Keep monitoring eligibility after you start.
Plan the change
Identify invoices already included in earlier VAT returns. A change of method must not result in the same transaction being counted twice or omitted.
Keep records showing which invoices have been paid and how payments have been allocated. This matters for part payments as well as invoices settled in full.
Review other schemes
Cash Accounting can be used with Annual Accounting where the conditions are met. It cannot be combined with the Flat Rate Scheme, which has its own cash-based turnover method.
Do not assume similarly named methods follow identical rules.
Prepare for leaving
Outstanding invoices need attention when the business leaves the scheme. Review the Cash Accounting notice and agree how remaining VAT will be brought into account.
We can compare the timing effect using your customer and supplier payment patterns.