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If you deal business
to business then it probably would not make
any difference, as they would be able to recover
the VAT.
94. There are two basic VAT
schemes for accounting for the VAT, cash accounting
and the standard scheme.
Cash accounting is where your turnover is below
the prescribed limit you only pay and reclaim
the VAT on what you have been paid, therefore
if a customer has not paid your invoice in the
quarter then you do not need to account for
the VAT until they do.
Standard scheme is where you account for all
VAT on your invoices, this time it does not
matter whether you have been paid for the goods
or not. By raising the invoice within the quarter
dates the liability up on you to account for
the VAT to Customs & Excise.
95. If during the year your
turnover exceeds the prescribed limit then in
the relevant quarter you must account for VAT
on the standard scheme plus pay any items not
previously accounted for, unless you get an
agreement with Customs & Excise.
The details of the limits
referred to above can be found on the following
websites:
www.customsexcise.gov
www.jtfoster.co.uk
96. It can be a good idea
to have a separate bank account specifically
to retain your VAT. I know many businesses do
this to avoid sudden cash flow problems when
the dreaded Vat bill is due, this also stops
you relying on this money as business funds.
If you are able to use this money and still
pay the bills on time without too much pain
then fine, but otherwise I would suggest the
above.
97. In all your planning
and projections remember to budget for tax payments.
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