Cash Accounting Scheme for VAT - Increase Thresholds

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Cash Accounting Scheme for VAT - Increase Thresholds

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Small to Medium Enterprises are unfailry funding the government by being forced to pay VAT, often well before it has been received from their customers. The thresholds that allow a company to pay VAT AFTER it has been received from their customers is far too low.

Using 'Standard' VAT accounting, a business pays VAT on its sales whether or not its customer have paid the relevant invoices. Using 'Cash Accounting', a company does not need to pay VAT until after its customers have settled the relevant invoices.

The problem is that you can use Cash Accounting only if your VAT taxable turnover exceeds £1.6 million. This threshold needs to be raised.

It cannot be fair that UK businesses with a turnover of over £1.6 miilion have to pay cash that they have not yet received from their customers, particularly as the VAT rate is now 20%.

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