| Accounting for VAT on a Cash Receipts BasisThe annual turnover threshold for the cash receipts basis of accounting for VAT to apply is to be increased from €1.25m to €2m from 1 May 2014.What is the cash receipts basis of accounting for VAT?Normally a business is required to include in its VAT return VAT charged on invoices issued during the period covered by the return. When a business is authorised to use the cash receipts basis of accounting for VAT, VAT charged on invoices issued does not have to be included in a VAT return until payment is received.Who can account for VAT on the cash receipts basis?A VAT registered person is entitled to apply to Revenue for permission to account for VAT on a cash receipts basis where either of the following two conditions is satisfied:1. At least 90% of the business’s supplies are to persons who are not registered for VAT or who are not entitled to claim a full deduction for any VAT charged; or2. The annual turnover for the business does not exceed a prescribed threshold. |
At the moment the prescribed threshold referred to in 2 is €1.25m however with effect from 1 May 2014 the threshold is to be increased to €2m.