Budget 2007 - the good news
The good news for UK SME's on the budget is on VAT. The cash accounting VAT scheme can now be used for businesses with an annual turnover limit up to £1,350,000 from 1 April 2007. Currently the limit is set at £660,000. That's a huge increase.
The VAT cash accounting scheme allows you to account for VAT (output tax) on your sales on the basis of payments you receive, rather than on tax invoices you issue. However, if you choose to use the scheme, you can only reclaim the VAT incurred on your purchases (input tax) once you pay your supplier.
This is good news for businesses with large trade debtors and good news generally for cashflow.
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This is a manual trackback... Your TypePad and my Wordpress don't appear to want to work together!
Anyway, I wrote a post that compared this new cash basis of accounting for VAT to a couple simplified methods for accounting for GST in Canada, our VAT equivalent.
Posted by: Neil McIntyre | 09 April 2007 at 03:58
Hi Neil
Thanks for the comment. The cash accounting method has been around a long time, but the big increase in limits is going to benefit a significant number of SME's. That's good news.
Posted by: Philip Woodgate | 10 April 2007 at 20:11