VAT Payed

[mwt.taylor88]

Hi All,

I understand VAT is paid at the end of each quarter. I am currently doing a cash flow and there is a time lag of 1 month from when the sale is made to when money is received. When working out quarterly VAT on sales, do I use when the sale is made or when the money is received - the answer to this affects which months fall into which quarter.

I hope that makes sense
many thanks
matt

 

[StevensOnln1]

That depends on whether you are using cash accounting for VAT or not. With standard VAT it is due with the quarter the sale was made, under cash accounting all VAT is paid and reclaimed based on the date you receive payment from clients and make payments to your suppliers. Don't forget that by filing your VAT return electronically (which is now a requirement) you have 1 month and 7 days after the end of the quarter to pay, plus an additional 3 working days if you pay by direct debit.

 

[SBlundell]

FYI - your anticipated turnover in the next 12 months must be less than £1.35 million to join the cash accounting scheme, and you must leave it once turnover exceeds £1.6 million: https://www.gov.uk/vat-cash-accounting-scheme/overview.

Also if you are using cash accounting don't forget it cuts both ways - you only declare output VAT when the money is received yes but you also only reclaim input VAT when the expenses are paid.