VAT & tax

[GARDNER4]

Hi
If one is registered for VAT, can they prepare the vat on cash basis but prepare accounts on accruals basis.

[jerome.lane]

In short, yes. Companies are generally required by accounting standards to adopt the accruals basis while sole traders and other unincorporated businesses can adopt the cash basis. VAT reporting and accounting standards are not linked, so it's separate decision to adopt the cash basis for VAT. It's usually beneficial to adopt the cash basis for VAT if your clients are slow to pay and/or you have little to no credit line.