Operating the cash accounting scheme

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of how to operate the cash accounting scheme. This note should be read in conjunction with the Cash Accounting Scheme ― eligibility, joining and leaving the scheme guidance.

Starting to use the cash accounting scheme

It should be noted that a business cannot retrospectively apply the cash accounting scheme. If a business is already VAT registered and is using normal VAT accounting methods, it can elect to use cash accounting from the start of a new VAT return period. The business must ensure that it meets all of the relevant conditions before commencing with using the scheme. Please see the Cash Accounting Scheme ― eligibility, joining and leaving the scheme guidance note for more information on the scheme requirements.

Businesses wishing to use the scheme must identify and separate supplies that have already been made or received, where VAT has already been accounted for or recovered on. Only supplies made or received where

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