THE VAT CASH ACCOUNTING SCHEME

If your VAT-exclusive turnover is £1.3Sm or less, then you may account for and pay VAT on the basis of cash paid and received.

You can join this scheme at any time.

Once you are in the scheme you can continue to use it until your taxable turnover exceeds £1.6m per annum.

What this means is that you don't have to pay VAT to HMRC on invoices that have not been paid yet and conversely are not allowed to claim VAT back on expenses you have incurred but not yet paid.