The traditional method for dealing with VAT is to declare based on the invoice date. This is known as the “tax point”. If the turnover of your business is less than £1.35m p.a., you can choose to declare VAT using the cash accounting scheme. This allows VAT to be declared based on the date of receipt or payment, rather than invoice date. This is particularly useful for businesses offering their customers credit, as the VAT charged on invoices does not need to be declared until such time as the invoice is settled.
If you require advice or would like to discuss whether cash accounting might benefit your business, please contact us.