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Cash Accounting - VAT and accounts

Cash Accounting - VAT and accounts

A question to settle a difference of opinion please.

If a company adopts the cash accounting scheme for VAT, can it also use the cash accounting dates for statutory accounts ?

For example, if a company's financial year end is August, and a sales invoice is raised on 20 August but not paid by the customer until 10 September, for the accounts (as opposed to the VAT Return), does the revenue re that sales invoice go into the year ending that August or the following financial year ?

Sorry to use this forum as a second opinion - I know the answer but a new client of mine disagrees with me, so I would like some other opinions please to show him !


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25th Sep 2011 11:10


No.  The statutory accounts should be prepared on accrual basis.

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By SteveOH
25th Sep 2011 12:15

3rd opinion

I echo what nilesh_m has said.

The Cash Accounting Scheme is merely a scheme to account for the payment or repayment of Vat. Accounts need to be prepared on the accruals basis.

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25th Sep 2011 13:45


Hi - easiest reference is to FRSSE which states accounts must be prepared on an accruals basis.  VAT is also calculated on an accruals basis and so when an invoice is raised the net income & VAT liability is recognised in the books it's just that "cash accounting" is a way open to smaller organisations to account for the liability to ease cash flow.

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26th Sep 2011 11:20


As reported elsewhere in AWEB and covered in a previous AnyAnswers thread the government is consulting on a 'simplification' of accounting requirements for small business.  That could involve the preparation of a receipts & payments account instead of a P & L A/c and disclosure in a psuedo Balance Sheet of debtors and creditors at the year end (obviously this 'Balance Sheet' would not balance).

Your client may have seen a press report about this.  But it is by no means in force!


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