Cash Accounting is a VAT scheme and it will improve your cashflow if your customers pay more slowly than you pay your suppliers and other costs. For example if your clients pay on 60 to 90 day terms and you pay suppliers on 30 days then VAT Cash Accounting should work in your favour. When you use Cash Accounting you pay VAT based on money received and money paid (so you exclude customers who havent paid).
You can use the Cash Accounting Scheme if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million.
Once you start to use cash accounting, you can continue to do so until your VAT taxable turnover reaches £1.6 million.
You can use Cash Accounting with other VAT Schemes, for example the Flat Rate Scheme.
You do not need to complete an application form or advise HM Revenue & Customs (HMRC) to start using the Cash Accounting Scheme.
You can start using the Cash Accounting Scheme at the beginning of any VAT period if you are already registered for VAT
Why pay VAT before you need to?