- The Cash Accounting Scheme is a special VAT regime that changes how businesses report and pay VAT on their bills.
- With this scheme, businesses focus on the date when cash hits the bank, not when the invoice is sent out.
- Under the scheme, businesses only pay VAT when the customer settles the invoice, not when the invoice is issued.
- The implementation of the scheme among EU Member States is not harmonized, and eligibility criteria vary by country.
- In the UK, businesses with an annual turnover of £1,350,000 or less are eligible for the scheme.
- The legal form of a company does not normally prevent it from using the VAT cash accounting system.
- Cash accounting can benefit small businesses by improving cash flow.
- Businesses must stop using the scheme if they no longer meet eligibility criteria or cannot comply with record-keeping requirements.
Source: marosavat.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
