Scenario: Self-Employed UK sole trader (using Flat Rate Scheme)
Question: Is it possible for the trader to use the cash basis for UK income tax, and at the same time use the accruals basis on VAT returns?
Rationale: the timing of various payments & sales make this more tax efficient for the trader (trader is a low-cost trader for FRS purposes)
I hope somebody can help as I have searched the legislation without much success. I cannot find any official HMRC law or reference that says this arrangement cannot be done. Indeed, the closest I have come to an answer lies at the bottom of BIM70005, ‘The cash basis does not affect the way a business should account for VAT. …’
Thoughts or guidance from the taxworld network would be welcome! Many thanks.
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