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Definition
Under the VAT cash accounting scheme, you account for output VAT when customers pay you and reclaim input VAT when you pay suppliers — rather than by tax point. It is available below a turnover threshold.
In plain terms
You do not hand VAT to HMRC on a sale until you have actually been paid for it — a real help if customers are slow. It also delays reclaiming VAT until you pay suppliers.
Why it matters for your company
For businesses with long debtor days, cash accounting eases the VAT cash squeeze. Weigh it against the standard scheme for your payment patterns. Estimate VAT with the VAT calculator.
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