I am a bit confused by some potentially contradictory advice/gaps in VAT 733 and, in particular, this Taxation article https://www.taxation.co.uk/Articles/2017/02/28/336088/pointers-practitio...
The question is probably best illustrated by way of example. Is the following correct?
VAT registered trader with a quarter to 30 April. FRS cash basis currently at, say, 14.5% FRS rate.
Will be limited cost trader and so has decided to go onto Standard VAT cash accounting from 1 May.
Bills say £18,000 gross in March (all for work done, no billing in advance) and £6,500 gross in April.
March billings received £6,000 in April and £12,000 May. April billings received May.
Will spend approximately £150 on qualifying goods in April.
Cash received to end March is clearly at 14.5%.
Cash received in April is at 14.5% because the supply was made pre April or because qualifying costs >2% of billings or because >2% of receipts (seems to be ambiguous advice in this area but comes out the same whichever way).
Cash received in May
The £12,000 from the March billings is presumably at 14.5% rate because that was the rate at the time of supply
Any cash received in May for billings re May is just on the Standard VAT regime.
What about the May receipts of April billings (£6,500)? Are these at 14.5% because the £150 purchases pulled April into that rate or is it at 16.5%?
I think it is probably the former which is quite neat as it uses the £150 purchases to pull both the April receipts and the May receipts into the old rate.
Presumably the corollary of that is if the £12,000 is received in April, both the April receipts and the May receipts of April billings will all be at 16.5% (Ouch!).
I imagine, for traders without a March quarter date, this could be quite a common scenario with the opportunity to cram in some qualifying expenditure before switching to the standard cash accounting scheme.
What are your views?