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

Taxable persons are eligible to begin to operate the scheme if3:

  1.  

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

  2.  

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

  3.  

    (3)     they have paid to HMRC all sums shown as due on those returns

  4.  

    (4)     they have 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 they become eligible to begin operating the scheme they have not:

  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 604, or

    4.  

      –     ceased to be eligible to operate the scheme

  7.  

    (6)     HMRC has not denied them access to the scheme in writing5, and

  8.  

    (7)     HMRC has not withdrawn

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