VAT - Disadvantages of Cash Accounting Scheme

Question 1

What is the first disadvantage of cash accounting schemes?

Answer 1

Input tax cannot be claimed until invoice is paid. Thus, the recovery in input VAT is delayed

Question 2

What is the second disadvantage of cash accounting schemes?

Answer 2

Not suitable for cash sales or zero-rated businesses, as they would only suffer the delay in input tax recovery

Question 3

Thus, when is the cash accounting scheme only beneficial?

Answer 3

When the invoice date is quite separate to the payment date