Commentary

V7.401 Cash flow improvement—cash accounting scheme

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.401 Cash flow improvement—cash accounting scheme

Part V7 Tax planning | Commentary

V7.401 Cash flow improvement—cash accounting scheme

If a business uses the cash accounting scheme (available to a business with annual taxable sales of £1.35m or less), then output tax is not included on a VAT return until payment has been received from a customer and bad debt relief on unpaid sales invoices is automatic. This is because the main feature of the scheme is that output tax is not due on a VAT return until payment has been received from a customer. For a business that does not use cash accounting, VAT is usually due on a return when either

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