Changes to VAT rules set to boost SME cash flow
New HMRC scheme evens out VAT payments
A special scheme to help cash flow in small to medium-sized businesses has been instituted by HMRC, following the announcement by the Financial Secretary to the Treasury, John Healey MP. This means more UK-based SME's can now benefit from easier ways to deal with VAT payment.
Normally, businesses would need to account for and pay the VAT due, as and when they receive and issue invoices. With the Cash Accounting Scheme (CAS), eligible businesses can defer paying their VAT until they have received payment from their customers.
In addition, the threshold for CAS has been more than doubled from £660,000 to £1.35 million.
Is your company eligible?
Whether your company is eligible for the scheme would depend on the size of your turnover. If your company's turnover is less than £1.35 million, you could take advantage of the CAS scheme, and defer paying your quarterly VAT, until you have received payment from your customers.
Not eligible for CAS?
You could be eligible for one of two other VAT simplification schemes:
- 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. John Brandwood, Senior Policy Manager, Corporation Tax & VAT at HMRC
For more information, visit the HMRC website or contact a Ceridian expert today.
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