Usually, the amount of VAT you pay HM Revenue & Customs (HMRC) is the difference between your sales invoices and purchase invoices. You have to report these figures and pay any money to HMRC even if the invoices haven’t been paid.
With the Cash Accounting Scheme you:
- pay VAT on your sales when your customers pay you
- reclaim VAT on your purchases when you have paid your supplier
To join the scheme your VAT taxable turnover must be £1.35 million or less.