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VAT Cash Accounting
What is it?
Using standard VAT accounting, you pay VAT on your sales whether or not your customer has paid you. Using cash accounting, you do not need to pay VAT until your customer has paid you. If your customer never pays you, you never have to pay the VAT.
You can use cash accounting if your estimated turnover during the next tax year is not more than £1.35 million. You can, continue to use cash accounting until your estimated turnover exceeds £1.6 million.
The Differences
Using standard VAT accounting you:
pay VAT on any invoices you have issued, even if you have not received the payment from your customer
reclaim VAT on any invoices you have received, even if you have not yet paid your supplier
Using cash accounting for VAT, you:
pay VAT on your sales when your customers pay you
reclaim VAT on your purchases when you have paid your suppliers
The Benefits
Using cash accounting may help your cash flow, especially if your customers are slow payers. You do not need to pay VAT until you have received payment from your customers. So if a customer never pays you, you don't have to pay VAT on that bad debt as long as you continue to use the cash accounting scheme.
VAT Cash Accounting and Opera II
Using the Cash accounting module designed for Pegasus Opera II, you can calculate the tax payable on a VAT return based on the money paid to a company rather than the amount invoiced.
Why not try our online calculator to see how much you could inject into your business or speak to a product specalist
