Q&A: Can I use the Cash Accounting Scheme for services that are subject to the VAT Reverse Charge?

Q. I’m a builder who is registered for the CIS.  Most of my work is as a subcontractor for several large companies. I’m VAT registered and so have been subject to the new VAT reverse charge rules since 1 March 2021. The legislation changes combined with a reduction in work due to the pandemic have seriously affected my finances. Could I use the Cash Accounting Scheme to help with this?

A. Unfortunately, you can’t use the scheme for services which are subject to the domestic reverse charge so signing up to the scheme wouldn’t be of assistance. Nevertheless, if you now find that you are submitting repayment VAT returns each quarter you can ask HMRC to allow you to submit monthly returns which will speed up your input tax claims and improve your position. The downside to this is that you will have to submit 12 VAT returns a year instead of four so you will have to weigh up the benefit against the additional administration.

About the Author

Paul Newbold

Partner

After qualifying with KPMG where he gained significant audit experience, Paul joined Torgersens in 1991 and became the firm’s audit partner in 2000. Paul employs his broad range of financial skills to provide commercial and accounting advice to a range of owner-managed businesses in the independent retail, education and professional services sectors. He also has extensive experience dealing with charities, Registered Social Landlords and not-for-profit organisations and co-operatives.   Outside of work, Paul likes to visit Eastern France and South-West German and read novels by David Morrell, Michael Blake and Harper Lee. He also likes watching films, his favourite is The Shawshank Redemption.

To get in touch please e-mail paul.newbold@torgersens.com.