HM Revenue and Customs
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Almost 60,000 more businesses now eligible for simpler VAT
More businesses across the UK can, from this month, benefit from easier ways to deal with VAT, following changes to one of the schemes aimed at helping small and medium-sized firms to better manage their cashflow.
Changes to the Cash Accounting Scheme (CAS) mean an extra 56,500 businesses can now benefit from the scheme, bringing the total number of businesses UK-wide to more than 810,000. This means 44% of VAT-registered firms can now enjoy simpler VAT.
Businesses are eligible for the scheme depending on the size of their turnover. Changes which come into effect this month mean the turnover threshold for eligibility for CAS has increased from £660,000 to £1.35 million.
The Scheme allows businesses with turnover of less than £1.35 million to defer paying their quarterly VAT, until they have received payment from their customers. Normally, firms must pay their quarterly return based on invoices issued and received - as opposed to money received and paid out.
"We recognise a quarterly VAT bill can sometimes cause a cashflow problem for some businesses, especially if their customers are a little tardy at coughing up," says John Brandwood, Senior Policy Manager, Corporation Tax & VAT at HM Revenue & Customs. "Plus the CAS also means businesses can get relief on the VAT element of any bad debts, without having to apply."
Two other VAT simplification schemes are also available: 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."
Notes to editors
1. The increased threshold for the CAS was announced by the Financial Secretary to the Treasury in February 2007, and takes effect this month. A link to the press release can be found at: http://www.gnn.gov.uk/Content/Detail.asp?ReleaseID=263096&NewsAreaID=2.
2. Due to the increased threshold, 812,500 businesses UK-wide are now eligible and being targeted to become members of the CAS. This is 44% of all VAT-registered businesses.
3. More information is available about the VAT simplification schemes can be found at: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&resetCT=true&id=HMCE_CL_001208
4. The National Advice helpline is 0845 010 9000.
5. The number of newly-eligible businesses which could benefit are broken down by region as follows:
Region No Newly Eligible
East of England 5,800
East Midlands 4,100
London 8,900
North East 1,500
Northern Ireland 1,400
North West 5,800
Scotland 3,800
South East 8,900
South West 4,500
Wales 2,000
West Midlands 5,400
Yorkshire and Humberside 4,300
Unknown 200
Total 56,500
Issued by HM Revenue & Customs Press Office
Website http://www.hmrc.gov.uk
