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Will You Take Advantage of Simpler Vat?
 More businesses across the UK can, from this month, benefit from
easier ways to deal with VAT, following
changes to one of the schemes aimed at
helping small and medium-sized firms to
better manage their cashflow.
Changes to the Cash Accounting Scheme (CAS) mean an extra 56,500
businesses can now benefit from the scheme,
bringing the total number of businesses
UK-wide to more than 810,000. This means 44%
of VAT-registered firms can now enjoy
simpler VAT.
The Scheme allows businesses with turnover of less than £1.35
million to defer paying their quarterly VAT,
until they have received payment from their
customers. Normally, firms must pay their
quarterly return based on invoices issued
and received - as opposed to money received
and paid out.
Businesses are eligible for the scheme depending on the size of
their turnover. The changes which come into
effect this month mean the turnover
threshold for eligibility for CAS has
increased from £660,000 to £1.35 million.
"We recognise a quarterly VAT bill can sometimes cause a cashflow
problem for some businesses, especially if
their customers are a little tardy at
coughing up," says John Brandwood, Senior
Policy Manager, Corporation Tax & VAT at HM
Revenue & Customs. "Plus the CAS also means
businesses can get relief on the VAT element
of any bad debts, without having to apply."
Two other VAT simplification schemes are also available: the Annual
Accounting Scheme - enabling small
businesses to pay their VAT in monthly or
quarterly instalments - and the Flat Rate
Scheme, which allows businesses to apply a
flat rate percentage to their annual
turnover.
"VAT simplification schemes allow businesses various options to
manage their cashflow better, and employ
simpler record-keeping. By putting
businesses in control of their own affairs,
the aim is to enable them to decide what's
best for them."
For more information on taxation issues
visit our Accounting portal here.
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