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HMRC internal manual

VAT Cash Accounting Scheme Manual

Cash accounting scheme: Entering the scheme: Conditions for entry

Regulation 58(1) lists the rules for entry to the scheme.

Without prejudice to paragraph (4) below, a taxable person shall be eligible to begin to operate the scheme from the beginning of any prescribed accounting period if -

(a) he has reasonable grounds for believing that the value of taxable supplies to be made by him in the period of one year then beginning will not exceed £1,350,000,

(b) he has made all returns which he is required to make, and has-

(i) paid to the Commissioners all such sums shown as due on those returns and on any assessments made either under section 76 of, or Schedule 11 to, the Act, or 

(ii) agreed an arrangement with the Commissioners for any outstanding amount of such sums as are referred to in sub-paragraph (i) above to be paid in instalments over a specific period, and 

(c) he has not in the period of one year preceding that time-

(i) been convicted of any offence in connection with VAT, 

(ii) made any payment to compound proceedings in respect of VAT under section 152 of the Customs and Excise Management Act 1979, 

(iii) been assessed to a penalty under section 60 of the Act, or 

(iv) by virtue of regulation 64(1), ceased to be entitled to continue to operate the scheme. 

Regulation 58(4) allows HMRC to withdraw entitlement to start using the scheme if the revenue needs protecting. Full details are in VCAS4350.