Accounting for VAT on a Cash Receipts Basis

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.

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