VAT Cash Accounting Vs Accrual Accounting
In the process of becoming registered for VAT, there are a number of alternative approaches you can take to calculating your VAT, each of which has a set of perks and drawbacks associated with it. The cash accounting technique and the accrual accounting method are two of the most frequent types of VAT accounting procedures. In most cases, value-added tax (VAT) is computed by deducting the amount of VAT that a company owes to its vendors from the amount of VAT that the company has collected from its customers (Output VAT). After then, this amount is considered to be your VAT liability; alternatively, in the event that you are paying out more VAT than you are collecting, this is the amount that you can reclaim from HMRC. Now, let's take a look at the two approaches of accounting for VAT that are the most common. Cash Accounting When you use the cash accounting technique, rather than basing your VAT calculation on when the invoices themselves were created, you base it on when the mon...
