| Can I account for VAT on a cash received basis? | VAT is normally due and payable at the time when a supply of goods or services is treated as having taken place. This is called the tax point. You must account for VAT in the tax period that the tax point occurs unless you use the Cash Accounting Scheme. This scheme allows you to account for output tax on the basis of payments you receive, rather than on tax invoices that you issue. This may be helpful to your cash flow, especially if you allow your customers extended credit or suffer a lot of bad debts. The upper turnover limit below which business can use this scheme is £1.35 million. VAT notice 731 explains in more detail.
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