Cashflow boost for SMEs

News Article - Tuesday, February 13, 2007

filed under: Business

Small businesses which are struggling with cashflow will be able to receive help from the beginning of April.

The firms will be eligible for the Cash Accounting Scheme (CAS) which allows VAT payments to be deferred until the companies have received payment from their customers, Accountancy Magazine reports.

This will replace the practice of having to account for and pay VAT when they both receive and issue invoices.

From April 1st, the threshold for the scheme is to be broadened from £660,000 to £1.25 million in a bid to help small and medium-sized operations overcome any cash flow problems.

Financial secretary to the Treasury John Healey said: "Doubling the CAS threshold will allow more than 50,000 businesses to significantly improve their cashflow.

"We know that small businesses are the engine for the UK's economy, so it is only right we look to improve the climate for them."

Firms will be eligible for the scheme if their annual turnover is £150,000 or less excluding VAT or £187,500 or less including VAT.

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