VCAS9450 | Cash accounting scheme: Previous changes to the scheme: Changes introduced on 3 July 1997

Budget Notice 16/97 issued on 2 July 1997 announced the following changes. The changes were also published on 22 October 1997 via update 2 to the May 1994 edition of Notice 731.

• Supplies that will not be paid for in full within 6 months from the date of the issue of the VAT invoice were excluded from the scheme.

• Supplies where an invoice is issued before the supply takes place were excluded from the scheme.

• HMRC were allowed to deny access to the scheme to protect the revenue.

• If a business exceeds the £437,500 tolerance it must leave the scheme immediately and account for all outstanding tax as it leaves the scheme.

• Businesses leaving scheme (not those expelled) were allowed to adjust their records for amounts relating to bad debts.

• Businesses were no longer automatically expelled from the scheme if they claim input tax before having paid.

• Businesses were no longer automatically expelled if they incur a surcharge.

• Businesses were no longer automatically expelled if they incur a misdeclaration penalty.

• Businesses were no longer automatically expelled if they incur a penalty for regulatory offences.

• Businesses becoming insolvent were required to account for VAT due on all supplies made and received up to the date of the insolvency.