V2.199 Cash accounting scheme

V2.199 Cash accounting scheme

Overview of the cash accounting scheme

Regulations made under VATA 1994, s 25, Sch 11, para 2(7) provide that a taxable person may, subject to meeting certain criteria, account for VAT under the cash accounting scheme1.

For the manner in which input tax and output tax are accounted for under the scheme, see V3.418, V3.503 and V5.108A. HMRC may vary the terms of the scheme by publishing a notice2.

Persons eligible to operate the cash accounting scheme

A taxable person is eligible to begin to operate the scheme if3:

  1.  

    (1)     he has reasonable grounds for believing that the value of his taxable supplies for the period of one year then beginning will not exceed £1,350,000

  2.  

    (2)     he has made all returns which he is required to make

  3.  

    (3)     he has paid to HMRC all sums shown as due on those returns

  4.  

    (4)     he has paid to HMRC all sums shown as due on any assessments made under VATA 1994, s 76 or Sch 11

  5.  

    (5)     in the period of one year preceding the date when he becomes eligible to begin operating the scheme he has neither:

  6.  
    1.  

      –     been convicted of any offence in connection with VAT

    2.  

      –     made any payment to compound proceedings under CEMA 1979, s 152

    3.  

      –     been assessed to a penalty under VATA 1994, s 60

    4.  

      –     ceased to be eligible to operate the scheme

  7.  

    (6)     HMRC has not denied him access to the scheme in writing4, and

  8.  

    (7)     HMRC has not withdrawn

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial