Using cash accounting and the Flat Rate scheme

As you use the cash accounting scheme, you account for output VAT according to the date that you receive the money.

For the first few months of 2011 you will be receiving money in respect of sales invoices issued before 4th January 2011 and as you enter each receipt into your records you will need to check whether the original invoice charged VAT at 17.5% or 20%. If the original invoice was at 17.5% you should account for VAT on the receipt at 17.5% notwithstanding the fact that you receive this money after 4 January 2011.

Because you also use the flat rate scheme, the actual amount of output VAT that you account to HMRC for will be based on the flat rate scheme percentage applying to you. These percentages change with effect from 4 January 2011 and you can find both the old and the new rates here.