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CAS thresholds increased for SMEs

Published On 11 May 2007 at 09:08:00

More small and medium-sized enterprises (SMEs) will be able to better manage their cashflow after the government introduced changes to the rules about how these companies deal with VAT.

HM Revenue and Customs (HMRC) have put in place changes to the Cash Accounting Scheme (CAS) which mean that 56,000 more SMEs can now benefit from the initiative which aims to make it easier to calculate VAT due.

This means that 810,000 businesses throughout the UK are now eligible for the scheme - 44 per cent of all VAT-registered firms in the country.

Now, to be eligible for CAS, businesses must have a turnover of less than £1.35 million. Previously the threshold was £660,000. Businesses whose turnover falls under the threshold can defer paying quarterly VAT until they have received payments from customers.

"We recognise a quarterly VAT bill can sometimes cause a cashflow problem for some businesses, especially if their customers are a little tardy at coughing up," explained John Brandwood, a senior policy manager at HMRC.

"Plus the CAS also means businesses can get relief on the VAT element of any bad debts, without having to apply."

Mr Brandwood added that CAS was one of a number of VAT simplification schemes designed to ease burdens on SMEs.

"VAT simplification schemes allow businesses various options to manage their cashflow better, and employ simpler record-keeping," he said.

"By putting businesses in control of their own affairs, the aim is to enable them to decide what's best for them."

 

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