VAT Cash Accounting Scheme

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Eligibility

You can use cash accounting if:

  • your business is registered for VAT
  • your estimated VAT taxable turnover is £1.35 million or less in the next 12 months

VAT taxable turnover is the total of everything sold that is not VAT exempt.

Exceptions

You cannot use cash accounting if:

  • you use the VAT Flat Rate Scheme - instead, the Flat Rate Scheme has its own cash-based turnover method
  • you’re not up to date with your VAT Returns or payments
  • you’ve committed a VAT offence in the last 12 months, for example VAT evasion

You cannot use it for the following transactions (you have to use standard VAT accounting instead):

  • where the payment terms of a VAT invoice are 6 months or more
  • where a VAT invoice is raised in advance
  • buying or selling goods using lease purchase, hire purchase, conditional sale or credit sale
  • importing goods into Northern Ireland from the EU
  • moving goods outside a customs warehouse

You must leave the scheme if your VAT taxable turnover is more than £1.6 million

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