The timing difference
Under the Cash Accounting Scheme, sales VAT is generally accounted for when customers pay, and purchase VAT is reclaimed when suppliers are paid. The joining turnover limit is £1.35 million, with other eligibility conditions. Review those conditions before changing your accounting method.
An illustrative timeline
Imagine an invoice raised in June and paid in August. Under a cash-based approach, the receipt date becomes central to the VAT timing. Keep the invoice and payment allocation linked. A sales total alone cannot show whether cash has actually been received.
Consider both sides of cash flow
Waiting for customer payments can be helpful, but waiting to pay suppliers also delays input VAT recovery. Build a forecast with realistic receipt and payment dates. A business that pays suppliers early and collects customers quickly may have a different outcome from one with long debtor delays.
Prepare the bookkeeping process
Make sure partial payments, refunds and bank allocations can be traced. Ask how opening invoices will be handled before switching schemes. The calculators on this site split prices and estimate amounts; they do not decide the correct return period for a transaction.
Keep learning
Official sources
Sources checked: 2026-09-26. Check the official guidance for later changes.
Educational information and estimates. These tools do not submit VAT returns or determine the treatment of a specific transaction.