VAT Q&A: exceeding the £1.6m VAT accounting period, zero-rating certificates

6 Nov 2014

This month’s Q&A by VAT expert Julie Green of CCH considers the implications when a VAT accounting period is set to exceed £1.6m, obtaining zero-rating certificates, and the twists and turns of entrepreneurs’ relief claims

My client is using the cash accounting scheme. Over the last six months the turnover of the business has grown substantially and it is anticipated that it will imminently exceed the limit for the scheme. When should my client leave the scheme and how should VAT be accounted for?

A business must leave the scheme if at the end of a VAT accounting period the value of taxable supplies (including sale of stock and capital assets but excluding VAT) in the previous 12 months reaches £1.6m.

When this figure is exceeded a business must leave the scheme immediately and use the normal method of accounting from the beginning of the next VAT accounting period.

The business has two options: