Eligibility for Cash Receipts Basis

Practitioners are reminded that the annual turnover threshold for eligibility for the cash receipts basis was increased from £250,000 to £500,000 with effect from 17 July 1997. There are obvious cash flow benefits to be obtained by qualifying traders from changing to a cash receipts basis of accounting for VAT.

To date the numbers of traders availing of the opportunity to opt for the cash receipts basis has been less than that expected when the measure was introduced. Practitioners dealing with clients who wish to change to the cash receipts basis should notify their local tax office giving details of their turnover for the last twelve months and an estimate of their likely turnover for the next twelve months.