Submit VAT return under Cash Accounting Scheme

There are special rules that apply to submit a VAT return under the VAT Cash Accounting Scheme. This VAT Cash Accounting Scheme is suitable for small businesses with sales of up to £1.35 million or below. If your sales have exceeded this threshold, your business must leave this scheme.

Under this scheme, you calculate your VAT on a cash basis. In other words, you only pay VAT on sales to HMRC when your customers paid you. Correspondingly, you only reclaim VAT on purchases when you actually settled your supplier’s invoice.

In short, you account for your VAT on the basis of payments received and payments made, rather than based on invoices issue and receive. In accounting world, the latter often referred to as accruals basis.

How to complete and submit the VAT Return under the Flat Rate Scheme

Box 1VAT due in this period on Sales£8,333.33
Box 2VAT due in this period on EC acquisitions£0.00
Box 3Total VAT due (the sum of Boxes 1 and 2)£8333,33
Box 4VAT reclaimed in this period on purchases£1000.00
Box 5Net VAT to be paid to Customs or reclaimed by you (Difference between Boxes 3 and 4)£7,333.33
Box 6Total value of salesexcluding VAT£41,667
Box 7Total Value of purchases, excluding VAT£5,000
Box 8Total value of EC sales, excluding VAT£0.00
Box 9Total value of EC purchases, excluding VAT£0.00
Source: GOV.UK

How to fill in each box is explained

Box 1 – You enter total sales, excluding VAT, of sales invoices already settled by your customers only. For example, you received £50,000 from your customers inclusive of VAT. The VAT rate is 20%. Your net sales are £41,666.67 and VAT on sales are £8,333.33. You leave out unpaid sales invoices issued.

Box 4 – You enter VAT on purchases you had paid not received. For example, if you receive a rent invoice of £5,000 + VAT of £1000 and you have not yet paid this invoice in this VAT return period, in this case, you leave out this invoice until you have paid it.

Box 6 – You enter your total sales excluding VAT in this box. Your sales figure in this box also to include EC sales.

Box 7 – You enter your total purchases invoices paid. excluding VAT in the box 7. Your purchases figure in this box also to include EC purchases.

Companies House filings

Besides, maintaining good VAT accounting records and submitting your VAT return on time to HMRC, if your VAT registered business is a limited company, you must also deliver your company accounts and confirmation statement to Companies House promptly.

If you require any help with your VAT returns, company accounts and confirmation statement filing, feel free to contact our accountants, they will be more than happy to assist you to comply with your filing requirements.

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